Super Fees That Quietly Drain Your Retirement Balance

Superannuation fees rarely feel urgent. They’re usually deducted quietly, automatically, and in small amounts. Yet over a working lifetime, those small deductions can add up to tens of thousands of dollars less at retirement.

In 2026, as cost-of-living pressures push Australians to review expenses more closely, super fees deserve attention. The challenge is that many of the most impactful fees aren’t obvious—and aren’t always easy to compare.

Why Super Fees Matter More Than They Seem

Super is a long-term system built on compounding. That works both ways: returns compound, but so do fees.

• A fee that looks small annually can significantly reduce balances over decades
• Fees are deducted regardless of whether markets are up or down
• Two funds with similar returns can deliver very different outcomes after fees

This is why regulators often stress comparing net returns (after fees), not just advertised performance.

The Most Common Super Fees Australians Overlook

1. Administration Fees

Admin fees cover account management and reporting. They may be charged as a flat dollar amount, a percentage of your balance, or a combination of both.

Flat fees can be harder on smaller balances, while percentage fees grow as your super grows.

2. Investment Fees

These fees pay for managing the underlying investments. They vary widely depending on whether you’re in a diversified option, indexed option, or more actively managed strategy.

• Actively managed options often cost more
• Higher fees don’t always mean higher returns
• Some costs are embedded and not itemised clearly

3. Indirect Cost Ratios (ICRs)

ICRs are one of the least understood parts of super. They represent costs incurred within investment vehicles and are usually deducted before returns are reported.

Because they’re not always listed as a line item on statements, many members don’t realise they’re paying them.

4. Insurance Premiums Inside Super

Life, TPD, and income protection insurance premiums are often deducted from super automatically.

• Premiums can rise as you age
• Cover may continue even if it no longer suits your needs
• Inactive or duplicate accounts may still charge premiums

Insurance can be valuable—but it’s still a cost that reduces your balance.

5. Buy–Sell Spreads

Buy–sell spreads apply when money moves in or out of investment options. While often small, frequent switching or rollovers can trigger repeated costs.

Who Is Most Exposed to Fee Drag

• People with multiple super accounts
• Members in high-fee legacy products
• Low-balance accounts paying flat admin fees
• Those who haven’t reviewed insurance settings

Fee drag is often worse when accounts are fragmented or forgotten.

What to Check on Your Super Statement

• Total fees paid in dollars—not just percentages
• Admin vs investment fees
• Insurance premiums deducted
• Any indirect or embedded costs

Looking at the annual total can be more revealing than scanning monthly deductions.

How Super Fees Fit Into a Bigger Retirement Plan

Lower fees alone don’t guarantee better outcomes, but they improve the odds—especially when combined with appropriate asset allocation and consistent contributions.

For many Australians, reviewing fees periodically can be as impactful as chasing higher returns, without taking on additional investment risk.

Quick Q&A: Super Fees Explained

• Q: Are low-fee funds always better?
  A: Not necessarily. What matters is net returns after fees and whether the investment option suits your risk profile.
• Q: Can fees really make a big difference?
  A: Over decades, even small differences can materially affect final balances.
• Q: How often should I review fees?
  A: Many people review annually or when major life or work changes occur.

Disclaimer: This article is for general information only and is not financial or tax advice. Superannuation rules and fees can change, and individual circumstances differ. Consider reviewing official fund disclosures or seeking professional advice.