It’s always interesting to see how much a sector costs to run.

Large super funds are a good case in point. Recently APRA published data that showed that administration and operating costs for the 2014 financial year increased by 8% to $5.9 billion.

By comparison, consumer prices increased by 3% over the same 12-month period.

Interestingly, APRA notes that the operating expense ratio (that is expenses divided by assets under management expressed as a percentage) fell to 0.53%, which doesn’t sound like a lot and this clearly shows the danger of any investment expenses being expressed as a percentage.

We can easily get conned into thinking the number is low when reality might be very different.

But what if you looked at these increased expenses in dollars for each super fund account? There are 31 million accounts in these funds, which means each account is being charged an average of $190.

What have funds been spending their operating income on? APRA says: “Compliance and system costs associated with the implementation of superannuation reforms have contributed to the increase in the industry’s cost base over the recent years. RSE licencees have also been allocating larger budgets to support brand recognition and member education, to establish internal investment management teams and to deploy complex membership data analytics.”

(RSE licencees hold a licence issued by APRA that permits them to run large super funds.)

I would expect that many trustees who authorised these additional costs would have received legal advice arguing that most of these expenses are justified, even for long-standing members.

But ask yourself how happy you would feel to know that you had accepted lower returns because your fund wanted to improve its marketplace image and other expenses that might not in any way help you save for your retirement.

The following graph tells a fascinating story when you consider that the market value of APRA regulated super assets has not had such a steady increase as the money extracted from member accounts:

Once again, check the variability when these expenses are expressed as a percentage of the market value of assets.

Note the $5.9 billion costs don’t include investment management expenses.

To this number we can add another $2.6 billion, or an average of $84 per account.

So on average, APRA funds have cost an average of $274 in the 2014 financial year to run.

So key questions for anyone in an SMSF are: how do your SMSF expenses compare? Have your total fund expenses (administration, actuarial, audit, tax) work been increasing much faster than inflation? What about your costs of investing money?

Clearly it would be worth your while doing some quick comparative research!

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.