Lowest-Cost Pension Funds Best-Featured Pension Funds

GOLD WINNER HOSTPLUS

A passive investment strategy with a strong growth focus has paid dividends

Hostplus has bumped ANZ off its winning position, held for the past three years, with its strongly performing, low-priced, passively invested balanced pension.

The diversified pension fund holds 75% in growth assets such as Australian shares (32%) and international shares (43%), with 25% in defensive assets such as fixed income (15%) and cash (10%). The index fund managers are IFM Investors (Australian and international equities), BlackRock (fixed income) and Citi (cash).

Fund returns are tax exempt in the pension phase, which explains why they are higher (10.1%pa over the past five years) than Hostplus’s balanced indexed super fund (9%).

The total investment fees for Hostplus’s pension product are a low 0.07%. The administration fee is $7.50 a week. Hostplus says this cost is higher for the pension fund because it has only 5500 members, which means it is not able to achieve the same benefits of scale as the accumulation fund, which has 1.1 million members. It says the pension product is also more complex to administer as it requires extra servicing and member communication.

Low-cost indexing has been the key to the success of the second and third placegetters, AustralianSuper and Sunsuper.