From 30 September 2022, changes to meet government regulations will require super funds to change the way they disclose fees and costs in their Product Disclosure Statement/s. RG97 changes are designed to improve the consistency of disclosure and comparability of fees and costs between superannuation funds. Australian Retirement Trust decided to commence this disclosure effective from 1 July 2022 – ahead of many in the industry.
What are the changes?
Fees and costs disclosure were simplified and consolidated into three groups – Administration fees and costs, Investment fees and costs, and Transaction costs. These fees and costs groups will be used to calculate a single ‘Cost of Product’ and simplify how we present the fees and costs in member statements (Annual and Exit Statements). In addition, amounts used from the Fund reserves to meet expenses which exceed the amounts credited to the reserve in the previous financial year will be disclosed. So, administration fees and costs disclosure includes both the administration fees deducted from the members account, and additional amounts from General reserves used to cover the costs of managing accounts.
What should you consider?
Know your partner: understand the long-term investment proposition.
Sustainability: particularly where there is limited reserve funding or the need for ongoing subsidising from corporate entity.
Innovation capacity: will this drive a need to restructure investment for fee reduction – at the cost of innovation?
Know the new differentiators: if fees and performance are becoming narrower.