16 June 2004

Simple Disclosure of Superannuation Fees and Charges

The Parliamentary Secretary to the Treasurer, The Hon Ross Cameron MP, today released a comprehensive package of reforms to improve and simplify the disclosure of fees and charges by superannuation funds.

This will be achieved by requiring additional information to be disclosed in product disclosure statements and periodic statements. Product disclosure statements are documents that set out the key features of superannuation funds to prospective members. Periodic statements provide fund members with regular information on the progress of their investments.

The package consists of five complementary measures.

  • Mandating the ASIC fee template in product disclosure statements.
  • Mandating the extension of the ASIC fee template to periodic statements to investors.
  • New single figure fee comparison table in product disclosure statements.
  • New boxed consumer advisory warning in product disclosure statements.
  • Facilitating use of the ASIC Superannuation Calculator on its website.

"This integrated package of reforms will ensure that fee information is presented to consumers in a simple, clear, consistent and comparable manner", Mr Cameron said.

"The package will make it much easier for Australians to understand the fees and charges that they pay in relation to their superannuation".

For the first time, information on fees and charges will be presented to consumers in a consistent format across the "life cycle" of a superannuation product: from the initial product disclosure statement to ongoing periodic statements.

Mr Cameron said that the package would also make it easier for consumers to compare different funds.

It will be easier for prospective members to compare fees and charges for different funds before deciding which one to join.

It will also be easier for existing members to compare the fees they are charged with those of other funds, using periodic statements and product disclosure statements.

"By making it easier for consumers to shop around and obtain the best value for money, the package will promote competition in the superannuation industry", said Mr Cameron.

Other investment based financial products, such as managed investment schemes, will also be covered by the package.

The package incorporates a new fee comparison table. This will be required to be included in all product disclosure statements issued by superannuation funds.

The fee comparison table will provide a single figure 'snap shot' of annual fees and charges for each fund.

This fee comparison table will provide consumers with a simple measure of fees and charges that is easy to understand.

Consumers who want more information on particular fees and charges can refer back to the ASIC fee template, on which the fee comparison table is based.

Mr Cameron stated "this latest initiative is further evidence of the Government's commitment to helping consumers make informed decisions through effective fee disclosure".

Under the extensive disclosure provisions introduced by the Financial Services Reform Act 2001, the Government has introduced strict and enforceable rules requiring full and clear disclosure in the critical area of fees and charges.

The package will improve the way this information is presented to consumers.

The Government has secured the support of the Australian Democrats for its reform package. Mr Cameron thanked Senator Andrew Murray for his constructive approach to these issues and his shared commitment to improved superannuation disclosure.

The Government would also like to thank the Association of Superannuation Funds of Australia (ASFA) and the Investment and Financial Services Association (IFSA) for their commitment to achieving better fee disclosure for the members of superannuation funds. While the two industry bodies were unable to agree on a common approach to achieving better fee disclosure, their discussions did produce a valuable foundation of agreement on which the Government was able to build.

The Government is currently developing the regulations necessary to implement the package. These will be released for public comment when they have been drafted.

It is anticipated that the measures contained in the package will be introduced progressively between 1 January 2005 and 1 July 2005. This will ensure that industry participants have sufficient time to make necessary changes to their internal processes and disclosure documents.

Further details of the new fee comparison table and the other elements of the package are set out in the Attachment below.

16 June 2004

Contact: Ian Beckett (02) 6277 4821 or 0418 614 159



Hypothetical Fund

EXAMPLE – the Balanced Investment Option BALANCE OF $50,000 WITH
Contribution Fees 0 - 4% For every $5,000 you put in, you will be charged between $0 and $200.
AND Management Costs 1.6% Plus, for every $50,000 you have in the fund you will be charged $800 each year.
EQUALS Cost of fund  

If you put in $5,000 during a year and your balance is $50,000, then for that year you will be charged fees of between:

$800 to $1,000*

What it costs you will depend on the investment option you choose and the fees you negotiate with your fund or financial adviser

* Additional fees apply:
Establishment fee - $50
Plus, if you leave the fund within the first 5 years, you will be charged withdrawal fees of between 0 and 5 percent of your total fund balance (between $0 and $2,500 for every $50,000 you withdraw).

How it works
The above table uses a balanced investment option, as a guide to the general cost of the [fund/product]. Detailed information on the example can be found at X.
Contribution fees
Contribution fees are shown separately as a percentage of contributions.
Management costs
Management costs charged directly to the investor are stated.
Indirect management costs are incorporated using an Expense Ratio (ER) which shows administration and investment costs deducted from the net assets for the [fund/product]. Transaction costs are not included.
Additional service fees are not included.


The Fee Comparison Table provides consumers with a clear 'snap shot' of the bottom line cost of being in a superannuation fund during a single year.

Where a fund offers different investment options, the Table will be based on the fees and costs that apply to a balanced investment option (70 per cent growth assets and 30 per cent defensive assets).

The terminology used to describe the fees and costs will be consistent with that used in the ASIC fee template. Requiring presentation of the Table in conjunction with the ASIC Template in a Product Disclosure Statement (PDS) will help consumers to find out what fees and costs apply and how they operate.

Contribution and management fees

The Table separately presents contribution fees and management fees. This distinction is necessary because these two types of fees are imposed on different amounts. It is also consistent with the ASIC Fee Template.

  • Contribution fees are 'event based' charges that are imposed on new contributions as they enter a member's account.
  • Management costs consist of administration costs and investment costs. They will include trailing commissions.
    • Management costs will be calculated using the Total Expense Ratio (TER) that has recently been published by the International Organisation of Securities Commissions (IOSCO). Australia is likely to be the first jurisdiction to adopt this new international standard.

The Table presents contribution fees and management costs as percentage ranges. This allows the Table to accommodate different fee structures. It also reinforces the fact that these fees can often be negotiated downwards.

These fees and costs will also be presented in dollar terms using a worked example of $5,000 in annual contributions and a $50,000 end of year balance.

The use of this worked example makes it possible to derive a single dollar figure for each superannuation fund.

Establishment, withdrawal and termination fees

Establishment, withdrawal and termination fees will be highlighted immediately below the Table.

Establishment fees are not included in the body of the Table because they are paid when an account is created and are therefore not relevant to the scenario in the worked example (which is based on a $5,000 contribution and $50,000 end of year balance).

Withdrawal fees and termination fees are included through use of footnotes rather than in the body of the Table.

  • This is partly for reasons of simplicity. In order for them to be included in the single figure, it would be necessary to add an assumption about when an amount might be withdrawn or an account closed. This would increase the Table's complexity (and hence reduce its usefulness as a simple tool of comparison).
  • In addition, these fees may not be relevant for many consumers. This is because termination fees on superannuation products currently being offered to new clients (as opposed to older 'legacy' products) usually cease to apply after five years, and the account on which the Table is based has already reached $50,000 (with a $5,000 contribution in the relevant year).

These fees will be disclosed as dollar amounts, if necessary, using worked examples.

Additional service fees

The Table will not include additional service fees such as switching fees or so called "dial up" adviser service fees because these relate to optional services that a fund member can choose whether or not to receive.



Studies show that small differences in both investment performance and fees and costs can have a substantial impact on your long term returns.

For example, total annual fees and costs of 2% of your fund balance rather than 1% could reduce your final return by up to 20% over a 30 year period
(e.g. reduce it from $50,000 to $40,000).

You should consider whether investment features – for example, superior investment performance, provision of better member services, or ethical and social considerations* – justify higher fees and costs.

You may be able to negotiate to pay lower contribution fees and management costs. Ask the fund or your financial adviser.


If you would like find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.fido.asic.gov.au) has a Superannuation Calculator to help you check out different fee options, or phone 1300 300 630 for more information.

* The extent to which ethical and social considerations are taken into account by the fund are described at p.X of the PDS.



Instead of mandating the inclusion of benefit/fee projections, the Government has decided to require the inclusion of a boxed consumer advisory warning in each PDS. This advisory warning has four objectives.

  • Emphasise the importance of considering 'value for money'.
  • Indicate that a small difference in a fund's investment performance or fees and costs can have a significant impact on long term investment returns.
  • Encourage consumers to shop around and attempt to negotiate lower fees and costs with their fund or adviser.
  • Provide a link to the ASIC website.


In developing this package, the Government has given considerable attention to the issue of benefit/fee projections, and the desirability of mandating their inclusion in PDS for superannuation products.

  • Benefit projections are long term estimates of the final returns that a member may receive from a fund (based on projected contribution rates, investment returns and fees and charges).
  • Fee projections are long term estimates of the total fees that a member will pay to belong to a fund. These include not just amounts actually paid in fees but also returns foregone as a result of money being taken to pay fees and charges rather than left in the fund to grow. Benefit projections are necessary to calculate the total cost of returns foregone.

The Government recognises the importance of this issue and the need for consumers to take a close interest in the adequacy of their retirement savings.

However it has decided against mandating the inclusion of benefit/fee projections in a generic superannuation fund PDS. It believes that this information is best provided to consumers by financial advisers or through interactive websites, where it can be placed in an appropriate context and adequately explained. Moreover, the Government believes that a comprehensive package is a better approach to alerting and educating consumers on the impact of fees and charges together with its broader financial literacy aims.

While the Government will not require this information to be provided, consumers will still have access to this type of information. In particular, they will be referred to the ASIC calculator through the boxed consumer advisory warning. Further, it will still be possible for funds to provide this type of information to prospective members via websites, with financial advice or even elsewhere in a PDS provided that appropriate warnings are given and necessary disclosures are made. However the fund must ensure that this information will not mislead consumers.

There are three major reasons why the Government has decided not to mandate the inclusion of benefit/fee projections.

  • The inclusion of benefit/fee projections would increase the complexity of the document. The aim of providing consumers with clear information that can be easily understood would be defeated if they are presented with fee disclosure material that requires extensive interpretation and qualification.
  • A clear description of current fees and charges and an ability to readily compare different products is far more useful to a person who is 'shopping around' for a fund than using a complex series of assumptions to estimate 'possible' benefits/fees in 30 year's time.
  • There is a clear potential that consumers may view long term benefit projections (or fee projections based on benefit projections) as a promised outcome or a prediction.