Fee transparency ‘driving disengagement’ among members, fund says

Fee transparency has become a growing problem in the super industry, driving disengagement and impacting Australia’s retirement outcomes, according to Vanguard Super.

As a new entrant in the system, having launched in late 2022, the fund said it has observed “no single tool or standardised comparison framework” that adequately meets consumers’ need for clear, accessible information on fees across superannuation funds.

“This is concerning, and perhaps the reason why our research is showing year on year that nearly one in two Australians don’t know what they pay in super fees, and continue to be disengaged with their super,” said Daniel Shrimski, managing director of Vanguard Australia.

“Our industry needs to engage and support Australians to find the best deal for their super, an exercise that can add thousands of dollars to their retirement savings.

“We are highly engaged consumers in Australia when it comes to mortgage rates, petrol costs and home energy bills – why should superannuation, one of most people’s largest assets, be any different?”

As such, Vanguard Super announced it is reducing its annual administration fee from 0.35 per cent to 0.33 per cent, while its fee cap will be lowered from $850,000 to $300,000.

The fund clarified that, for most of its investment options, the yearly fee – including the sum of administration, investment and transaction fee, and costs – will be reduced to 0.56 per cent per annum, while for the portion of a member’s balance above $300,000, the yearly fee reduces to 0.28 per cent per annum.

As a result, Vanguard Super’s default Lifecycle product will be one of the lowest cost options for Australians across a range of ages and superannuation balances and more than 30 per cent lower cost than the industry average.

“Following a successful 18 months in market, we’re pleased to be able to start delivering on our promise at launch to members to further lower fees, just like we have continued to do for our non-super clients over 27 years in Australia,” Shrimski said.

Shrimski noted that the less fees Australians pay on their super balance, the more money they will have reserved for retirement.

“Even a small change in fees can make a big difference to how much money you have to spend in retirement – and fees are one of the few things you can control through your choice of super fund,” said Shrimski.  

“From day one, Vanguard Super has been focused on delivering strong performance, while keeping yearly fees low for our members, because we know the material impact fees and costs can have on retirement outcomes.

“This is just the beginning for us, and we will continue to advocate for our members, embrace innovation and personalisation, and lower fees, delivering our clients better outcomes.”