The different types of superannuation fees
All superannuation funds can charge a range of fees for managing superannuation funds and investments. If applicable, fees are regularly deducted from your account balance depending on the particular investment or service. The most common fees are:
Administration fees – covers the general costs of running and managing a super fund, such as collecting contributions from you and your employer, maintaining transaction records, sending out annual statements, and providing services through call centres.
Investment fees – pays for the services that funds provide to help grow your account balance, including buying and selling assets.
Insurance fees – pays for the administration of insurance arrangements, such as claims processing and underwriting.
Indirect cost ratio – represents the costs incurred by the underlying investment vehicle into which the Mercer Super Trust invests and may include, but is not limited to:
performance related fees
investment fees for direct property and infrastructure managers
any expense allowance charged by any underlying investment vehicle or manager of those vehicles
the net explicit transactional and operational costs, and
over-the-counter derivative costs.
How we calculate your superannuation fees
With the Mercer Super Trust, the fees for members are outlined in detail in your Plan’s Product Disclosure Statement, along with any other materials you’ve received since joining the Mercer Super Trust. You can also read your annual statement, which will show the total dollar value charged in fees for the statement period.
As a general guide, our administration fees include a dollar based fee, an asset based fee and an expense allowance that reflects the costs of running the account. Investment fees are usually charged as a percentage of your super balance and vary based on your choice of investment options and the style of management (for example, active or passive). Indirect cost ratios are based on a percentage per annum of your balance, and also depend on the investment option you have chosen.
Choosing a super fund based only on its fees and charges may be counterproductive. You may also want to consider factors such as its values and ethics and services provided.
For example, at Mercer Super we believe it is important for investors to integrate environmental, social and corporate governance risks and opportunities into their investment strategies. With that in mind, we offer a range of ethical and sustainable investment products.
Understanding your superannuation fees
Any fees and charges can have a big impact on the long-term returns of your super account. So it is important to understand what fees your super fund is charging and how they compare to other funds, while also factoring in whether superior investment performance and member services may justify higher fees and costs.
A combination of low fees and competitive investment returns is likely to deliver the best superannuation performance over the course of your working life.
To compare super fees and investment performance, please see the Australian Taxation Office’s YourSuper comparison tool.
Disclaimer: This document has been prepared and sent on behalf of Mercer Superannuation (Australia) Limited (‘Mercer Super’), ABN 79 004 717 533, Australian Financial Services Licence #235906, the trustee of the Mercer Super Trust ABN 19 905 422 981. Any advice contained in this document is of a general nature only, and does not take into account the personal needs and circumstances of any particular individual. Prior to acting on any information contained in this document, you need to take into account your own financial circumstances. Please consider the Product Disclosure Statement, Product Guide, Insurance Guide, and Financial Services Guide before making a decision about the product, or seek professional advice from a licensed, or appropriately authorised financial adviser if you are unsure of what action to take. 'MERCER' is a registered trademark of Mercer (Australia) Pty Ltd ABN 32 005 315 917. Copyright 2022 Mercer LLC. All rights reserved.