From 30 September 2017, all superannuation funds are required to disclose investment costs in a new manner.

The key change is that some costs that were not previously disclosed (because they were taken into account in the valuation of assets and incorporated into unit prices) are now required to be shown.

Even though investment costs may look like they have increased from previous years, they have not changed. That is, it is the extent to which these costs are now required to be disclosed that has expanded. All costs incurred continue to be included in the unit price of each option.

For example, the Super SA Balanced option (the default option where members’ money is invested if no option is selected) returned 11.1 per cent for the year to 30 June 2017.

Investment costs disclosed under the previous disclosure method were estimated at 0.71 per cent. However, under the new presentation method, the estimated cost is now 0.98 per cent. However, the return after payment of investment costs under both methods is still the same, 11.1 per cent.

The investment cost components disclosed now include investment management costs incurred through financial intermediaries plus transaction and operating costs. The table below shows the investment cost components reflected in the Indirect Cost Ratio (ICR). The ICR expresses the investment costs as a percentage of average funds managed.

Investment cost components included in the ICR are as follows:

Investment cost component

Old cost disclosure

New cost disclosure

Indirect cost ratio (ICR) (excluding performance fees, and transaction and operating costs)

 

(× Did not include financial intermediary costs)

 

(Includes financial intermediary costs)

Performance fees

Transaction and operating costs

×

 

In addition to the above change in reporting for the ICR, investment related borrowing costs and property operating costs are now also separately referenced. All of these costs are deducted from the assets of the investment option and reflected in the unit price. All returns reported by Super SA are net of all investment costs.

The Super SA Fees and Costs fact sheet contains additional information for each scheme/product.