A 1% fee difference costs a typical Australian worker $150,000-$250,000 of retirement balance, and about 85% of active managers still lose to the index over 15 years. The case for checking which option your super sits in: today.
Adjust the variables below to simulate outcomes, compare rates, and see real-time projections.
A direct comparison of features, rules, limits, and eligibility requirements.
| Feature / Detail | Passive Index Super Fund | Actively Managed Super Fund |
|---|---|---|
Strategy | Tracks broad ASX and global indices automatically | Analysts pick stocks and time markets, trying to beat the index |
Total yearly fees | Roughly 0.10% to 0.35% | Roughly 0.80% to 1.50%+ |
Odds of beating the index | Never beats it: tracks it, minus a small fee | SPIVA Australia: roughly 85% of active equity funds underperform over 15 years |
APRA performance test | Passes almost by construction: low fees keep it near benchmark | The funds that fail and must write apology letters are overwhelmingly high-fee active products |
Unlisted assets | Essentially none: listed shares, priced daily | Often heavy: airports, toll roads, office towers, private equity, valued periodically |
Downside management | None: rides every crash to the bottom and back | Managers can shift to cash and defensives ahead of trouble (and often mistime it) |
Analyze the advantages and drawbacks of each financial product before making a decision.
Fees sound like rounding errors. Compounding makes them structural. Take a $50,000 balance, 7% gross returns, 25 years to retirement, no further contributions: just to isolate the fee effect. At 0.25% total fees the balance compounds at 6.75% and reaches about $255,800. At 1.25%, it compounds at 5.75% and reaches about $202,300.
That is $53,500, more than the entire starting balance, transferred to the fund manager, from fees averaging under $700 a year at the start. Add a career of contributions on top and the Productivity Commission's estimate of $150,000-$250,000 lifetime cost for a 1% fee gap stops sounding dramatic and starts sounding like arithmetic.
The reason it feels invisible: fees are skimmed from returns before you ever see them. Your statement never shows the balance you would have had.
Paying 1% extra would be rational if managers reliably earned it back. The SPIVA Australia scorecard — S&P's long-running audit of active funds against their benchmarks — says they don't: over 15-year windows, roughly 85% of active Australian equity funds return less than the plain ASX 200 index they are paid to beat.
The mechanism is not stupidity; it is the handicap. A manager charging 1% must beat the market by 1% every year just to draw level with an index option. Some do it for a while. Very few do it for fifteen years, and there is no reliable way to identify them in advance.
APRA's annual performance test now enforces this publicly: funds whose net returns lag the benchmark must write to every member admitting it, and a second failure bans them from taking new members. The failure lists are dominated by exactly what you would expect: high-fee active products.
Here is the trap: being in a well-regarded industry fund does not mean you are indexed. The default 'Balanced' or MySuper options at AustralianSuper, Hostplus, Cbus and the rest are actively managed hybrids with meaningful unlisted-asset allocations and mid-range fees. The indexed tiers — Hostplus 'Indexed Balanced', AustralianSuper 'Indexed Diversified' — sit one menu below the default, at fees up to 70% lower.
The move is unglamorous: log into your super portal, open investment options, and switch from the default to the indexed option. No fund transfer, no rollover paperwork, no tax event. Check the total fee (admin + investment) lands in the 0.10-0.35% range and you are done.
Two honest boundaries. First, unlisted assets in active defaults do smooth reported returns: if you value that stability and understand its cost, that is a legitimate preference. Second, indexing solves the fee problem, not the risk problem: within about ten years of retirement, shift part of the balance toward defensive assets regardless of which side of this comparison you chose, because a 30% drawdown at 63 is a different animal than at 33.
This is one of the few financial questions with a near-settled answer for the accumulation years: the average active fund charges four to ten times the fees and about 85% of them still deliver less than the index over 15 years. You do not need to switch funds to act on it: the big industry funds all offer indexed options (Hostplus Indexed Balanced, AustralianSuper Indexed Diversified, and Vanguard Super as a pure-index provider); switching investment option inside your existing fund takes minutes. The honest caveats: your default MySuper option is not an index fund no matter how good the brand is, and within roughly ten years of preservation age the priority shifts from fee minimisation to sequence-of-returns protection, where a defensive allocation earns its keep.
Anyone 10+ years from preservation age who wants the market return without paying an underperforming manager for the privilege.
Members near retirement who want active de-risking, and investors who specifically value unlisted infrastructure exposure enough to pay for it.
The rules and figures on this page are researched from official primary sources:
