I am in my late 50s and will be retiring from Australia Post at some stage. As such, my question is, with the APSS (defined benefit) super scheme I can leave my benefit with them and draw a monthly pension. I'm told apart from a very small admin fee, app $250/year, there are NO other fees /charges for management of my funds. This is a great saving annually, Is this true? As other funds I'm considering charge nearly 1 percent. The difference is APSS seems to be inflexible and void of advice. An adviser offering full service using a choice of AMP funds for example offers more of course. So, an adviser & AMP would cost app $8000 pa. Question of interest remains - Does the APSS charge fees?
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Thanks to Daryl Dixon, the Executive Chairman of Dixon Advisory and Superannuation Services, for providing insights into one of the key areas that many consumers are asking of us. Daryl is one of Australia’s foremost investment experts and a well known writer and consultant. He is the author of numerous newspaper articles on investment and superannuation and writes regularly for The Canberra Times, the Public Sector Informant and Financial Review Smart Investor magazine
Gaining a complete understanding of all the fees associated with superannuation funds is not always an easy process. Funds use different terminology when describing their fees and the investment option you choose will have a significant impact on the total cost. We find the best place to look when comparing fees is the fund’s Product Disclosure Statement (PDS).
Before answering your question, your reference to being in the APSS defined benefit division would need further clarification. If you are also a CSS member (which is where Australia Post employees held their super prior to 1990) there is added complexity to your situation as you may be entitled to other benefits such as an indexed pension and specialist financial advice should be obtained. Assuming you are a member of the standard APSS defined benefit scheme for ongoing employees and you are receiving a lump sum amount, it is certainly understandable that you have questions around which super fund to invest in and draw a pension from.
Upon reviewing the PDS for the APSS’s pension option, it appears no fees are applicable for services such as switching or administration however an ‘Indirect cost ratio’ applies depending on your choice of investment option (either 1.08% for the Market return option or 0.14% for the Cash option). This percentage fee should be factored into your decision as it is paid at the fund level and will be deducted from the investment returns before they are passed on to your account. The higher fee for the Market return option reflects it is invested in diversified assets including shares and property while the lower fee for the cash option reflects a more basic approach of investing in cash.
With any super fund decision it’s important you gain an understanding of the costs but also what features and services they allow you to access. To help you make an informed decision this should be compared against what you need for your personal situation.
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