Take a closer look at your fund’s fees

New rules may cause you to do a double take when you y check your y super, writes s Tim McIntyre

AUSTRALIANS should not be alarmed if their superannuation statements suddenly show a fee increase, claims one wealth expert.

October saw the introduction of ASIC super fee rule changes, designed to provide Australians with more information on the costs of investing, but may cause people to think their own payments will increase, says Josh Callaghan, general manager of wealth at comparison company Canstar.

“If you’re money conscious and keep a close eye on your super, you might be shocked to see that your fees may look much higher than they did last month,” Mr Callaghan said.

“The challenge is the new fee disclosure measures add a layer of complexity when it comes to comparing funds. Some investment options now require super funds to disclose more fees than before, resulting in what appears to be a fee increase when compared to the fees reported in September.”

While this sounds confusing, Mr Callaghan uses an example of two funds that both invest in commercial property.

“Fund A owns the property directly while Fund B owns it through a third-party property trust,” he said. “Fund A needs to account for and disclose all costs involved in generating an income from that property such as the cost of cleaning, maintenance and other expenses; while

“Fund B just needs to disclose the fee charged to them from the third-party. The result of this is while the investment strategy, cost to the fund member and return of both funds won’t change, Fund A’s disclosed fees will now be higher while Fund B’s fees remain the same.”

Mr Callaghan is quick to point out that the fact your super fund is disclosing more fees, does not mean you will pay more.

“If you’re considering switching funds, it’s important to remember that the fees disclosed in a fund’s Product Disclosure Statement (PDS) will reflect the costs that are associated with generating a return and may not represent what is being deducted from your account each month. To make a solid comparison between funds, it’s a good idea to consider both fees and performance hand-in-hand.” If Australians have any questions about disclosed fees or any other part of their superannuation statement, they should call their fund for an explanation.