We’re changing our fees and costs

VicSuper has always endeavoured to keep fees as low as possible. That’s because we know that keeping fees low can help you maximise the overall returns on your investment. Indeed, one of the key considerations behind the decision to merge VicSuper with Aware Super (previously First State Super), was the potential benefits that greater size and scale could bring, including opportunities for fee and cost savings.

We’re pleased to announce that from 1 November 2020, we’ll be reducing the account keeping fee by 34%, and reducing the administration fee by 9%. We’re also changing the way we calculate your fee cap. For the majority of VicSuper Flexible Income and Term Allocated Pension members these changes mean a reduction in the annual administration fees you pay on your account. However, some of our high balance members (less than 1% of VicSuper’s total membership), will experience a small increase in their administration fees of up to $52 per year.

We’ll also be changing the way we structure our investment fees and indirect cost ratio to align with the fee structure of Aware Super’s other products. We expect this to result in a reduction in investment fees and indirect costs for most investment options. Members in the Capital Stable and Capital Secure options are expected to experience small increases in their investment fees and costs due to the fee restructure.

  • Reduced administration fees and fee cap

    As a result of the merger with Aware Super, from 1 November 2020 your administration fees and the way we calculate your fee cap will change as follows:

    • Account keeping fee: will go down by 34% from $78.21 per year ($1.50 per week) to $52.00 per year ($1.00 per week)
    • Administration fee: will go down by 9% from 0.22% per year to 0.20% per year
    • Cap calculation change: the $52.00 per year account keeping fee will be excluded from the fee cap of $1,500 per year. Therefore, the maximum total administration fees we can charge you from 1 November 2020 will be:

      an account keeping fee of $52.00 + a maximum of $1,500 in administration fees = $1,552 per year
  • Changes to investment fees

    From 1 November 2020, we’re aligning our investment fee structure and the way we disclose these fees with Aware Super:

    • Removal of the indirect cost ratio (ICR): We will show all investment-related fees and costs under the heading “investment fee” instead of showing indirect costs as a separate ICR (as we’ve done previously). As a result, our investment fees in some options will appear to have increased, but this change simply reflects the reclassification of the ICR, which will be shown as zero in future.
    • Inclusion of a management fee: The investment fees for each of the diversified investment options (i.e. the Equity Growth, Growth, Socially Conscious, Balanced, Capital Stable and Capital Secure investment options) will include a new charge: a management fee of 0.15% per year. The Australian Shares investment option will include a management fee of 0.06%. It will not be charged on Term Deposits or the Cash investment option.

    In most options, the reduction in various components of the investment fee (i.e. direct and indirect investment costs, transaction costs, custody fees etc) has outweighed or equalled the amount added for the trustee charge. However, given the already low base of fees within the Capital Stable and Capital Secure investment options, these reductions have only partially offset the management fee. As a result, the projected investment fees and costs for Capital Stable members will increase from 0.57% to 0.58% per annum and for Capital Secure members will increase from 0.37% to 0.44% per annum for 2020/21.

    A comparison of all estimated old and new investment fees and costs for each investment option is shown below.

    Estimated investment fees and costs by investment option (% per year)

    At 30 June 2020, all the investment assets of VicSuper were combined with the investment assets of First State Super (now Aware Super). This means that the overall investment fees and costs have come down for most VicSuper Flexible Income and Term Allocated Pension members. The table below shows the estimated investment fees and costs for each investment option from 1 November 2020 based on both estimated 2019/20 amounts and projected 2020/21 amounts.

      Estimated 2019/20 investment fees and costs1

    Projected 2020/21investment fees and costs2, 3

    VicSuper Flexible Income and Term Allocated Pension investment option Investment fee % per year Indirect cost ratio (ICR) % per year Total investment fees and costs % per year Investment fee (now includes ICR) % per year Total investment fees and costs $ per year for $50,000 balance
     Diversified investment option
    Equity Growth 0.30 0.42 0.72 0.71 355
    Growth 0.23 0.54 0.77 0.64 320
    Socially Conscious 0.15 0.45 0.60 0.55 275
    Balanced 0.21 0.45 0.66 0.66 330
    Capital Stable 0.18 0.39 0.57 0.58 290
    Capital Secure 0.14 0.23 0.37 0.44 220
     Single asset class investment option
    Australian Shares 0.32 0.00 0.32 0.14 70
    Term Deposit 0.00 0.00 0.00 0.00 0
    Cash 0.02 0.00 0.02 0.02 10

     

    1The investment fee and ICR for 2019/20 are based on the estimated investment related costs that these investment options incurred in the Victorian Superannuation Fund for the 12 months ended 30 June 2020. The figures disclosed are based on historical information provided by the former trustee of the Victorian Superannuation Fund. If it becomes apparent that actual costs will differ materially the estimates will be updated. It is important to note that past costs are not a reliable indicator of future costs.
    2The Investment fees for 2020/21 are a forecast of the expected fees and costs. The forecast is based on actual fee arrangements with investment managers where these are known. For fees and costs that are not fixed, such as performance fees, we have forecast the amounts based on expected outcomes. Savings are expected to be derived from reducing the number of external managers where it made sense to do so and renegotiating fees with retained managers, increasing the amount of assets managed internally, and fee savings from moving to a new custodian. These estimates are predictive in nature, may be affected by inaccurate assumptions or by unforeseen events, and may differ materially from the actual fees and costs for the period.
    3From 1 November 2020, all indirect costs are included in the investment fee.
  • Understanding the fee changes

    The table below shows you the projected investment fees and costs for 2020/21. And remember, while it may look like the investment fees for 2020/21 have increased, these figures now include indirect costs (which used to be shown separately). So in fact, the total investment fees and costs for most of our options have either gone down or stayed the same.

    The difference in the fees and costs you’ll pay will depend on which investment option(s) you’re invested in. You can find investment fees and cost changes for all the investment options in the tab above, Changes to investment fees.

    Fees and other costs

    VicSuper Flexible Income and Term Allocated Pension from 1 November 2020

     

    Type of fee Estimated 2020/21 amount (projected) How and when the fees will be paid
    Investment fee1 For 2020/21, ranges between 0.00% per year to 0.71% per year ($0 to $355 per $50,000) (estimated)2 An estimated percentage, depending on your investment option. Estimations for each investment option are shown in the tab above. Deducted from the assets of the option or the assets of underlying investment vehicles before the unit price for an investment option is determined. This means that the investment earnings credited to your account already have these investment fees deducted beforehand. These fees are not deducted directly from your account.
    Administration fee For 2020/21 an account keeping fee of $52.00 per year ($1.00 per week) plus an administration fee of 0.20% per year ($100 per $50,000).

    The percentage-based administration fee is capped at $1,500 per year ($125 per month) excluding the account keeping fee.
    The account keeping fee is calculated daily and deducted from your account monthly, or on exit. The administration fee is calculated and deducted monthly based on the account balance at the end of the month and prorated for the number of days in the fund. On exit, the fee is calculated based on the previous month end balance and prorated for the number of days in the fund.
    Buy-sell spread Nil The fund does not charge a buy-sell spread.
    Switching fee Nil The fund does not charge a switching fee.
    Advice fee
    relating to all members investing in a particular MySuper product or investment option
    Nil No advice fee is charged for providing general and simple advice limited to your account.
    Other fees and costs3 Comprehensive financial advice If you require comprehensive financial advice of a more complex nature, additional fees may be paid to a financial adviser. The fees will depend on the complexity of the advice you are seeking. If you obtain complex financial advice from a planner in our financial planning business, you will be informed of the fee before you proceed. If you are issued with a Statement of Advice, it will contain details of the fees, which may be deducted from your account when the advice is received (or you may need to pay the fee directly).
    Indirect cost ratio For 2020/21, nil2 From 1 November 2020, all indirect costs are included in investment fees.

    1 If your account balance for a product offered by the superannuation entity is less than $6,000 at the end of the entity’s income year, the total combined amount of administration fees, investment fees and indirect costs charged to you is capped at 3% of the account balance. Any amount charged in excess of that cap must be refunded.
    2The Investment fees for 2020/21 are a forecast of the expected fees and costs. The forecast is based on actual fee arrangements with investment managers where these are known. For fees and costs that are not fixed, such as performance fees, we have forecast the amounts based on expected outcomes. Savings are expected to be derived from reducing the number of external managers where it made sense to do so and renegotiating fees with retained managers, increasing the amount of assets managed internally, and fee savings from moving to a new custodian. These estimates are predictive in nature, may be affected by inaccurate assumptions or by unforeseen events, and may differ materially from the actual fees and costs for the period.


    An example of annual fees and costs from 1 November 2020 based on 2020/21 estimates

    We’ve used the VicSuper Flexible Income and Term Allocation Pension Growth investment option in the example below. You can also find the investment fee and cost changes for all the investment options in the tab above, Changes to investment fees.

    VicSuper Flexible Income and Term Allocated Pension Growth option (based on 2020/211 estimates)

    Impact on a balance of $50,000
    Investment fee1 0.64% per year For every $50,000 you have in the superannuation product it is estimated you will be charged $320 each year.
    PLUS
    Administration Fees
    $52.00 per year
    ($1.00 per week)
    + 0.20% per year
    And, you will be charged $152 in administration fees.
    PLUS
    Indirect cost2
    0.00% per year And, indirect costs of $0 each year will be deducted from your investment.
    EQUALS
    Cost of product3
      If your balance was $50,000, then for 2020/21 it is estimated you will be charged fees of $472 for the pension product.

    You can download our detailed pdf for a side-by-side comparison of the estimated investment fees and costs you paid in 2019/20 and the projected fees you are expected to pay in 2020/21.

    1 The Investment fees for 2020/21 are a forecast of the expected fees and costs. The forecast is based on actual fee arrangements with investment managers where these are known. For fees and costs that are not fixed, such as performance fees, we have forecast the amounts based on expected outcomes. Savings are expected to be derived from reducing the number of external managers where it made sense to do so and renegotiating fees with retained managers, increasing the amount of assets managed internally, and fee savings from moving to a new custodian. These estimates are predictive in nature, may be affected by inaccurate assumptions or by unforeseen events, and may differ materially from the actual fees and costs for the period.
    2From 1 November 2020, all indirect costs are included in the investment fee.
    3Additional fees may apply.

Changes to your investments

Following our merger 1 July 2020, we’ve reviewed our investment options and, effective 1 November 2020, we’ll be making some changes to how we invest.

  • Changes to our investment objectives: The downward revisions in the investment objectives for some investment options reflect a more conservative approach to estimating returns. For the Australian Shares option, the new investment objective reflects the change from an ‘active’ to a ‘passive’ investment approach.
  • A more detailed approach to showing what we invest in: Going forward, we’ll show a more detailed breakdown of the Equities, Alternatives and Real Assets asset classes to give you a better understanding of how your savings are invested. Descriptions of these asset classes are included in the following section.
  • Revised strategic asset allocations (SAAs): Just as we normally do from time to time, we've reviewed and changed the SAAs (the medium to longer-term target allocation to the various asset classes) and target asset allocation ranges (the minimum and maximum amounts we can invest in each asset class) for our investment options, consistent with each option’s investment objective. Our revisions will bring these into line with the investment approach of Aware Super.
  • Changes to Standard Risk Measures (SRMs): For our Socially Conscious and Growth (MySuper) options, we’ve increased the strategic weighting to growth assets. This has resulted in an increase to the Standard Risk Measure (SRM), a measure that allows investors to compare risk within and across super funds for different investment options.
  • Asset class descriptions

    To help you better understand where your superannuation is invested, from 1 November 2020 we’ll show Equities, Alternatives and Real Assets broken down in more detail. Brief descriptions of each of these asset classes are provided below.

    Equities (shares) are a portion or share of a company that can be bought or sold on an exchange. We will break this asset class down into Australian Equities, for those companies listed on the Australian Stock Exchange, and International Equities, for any companies listed on an overseas stock exchange.

    Alternatives include a wide range of investment strategies that will be split out into:

    • Private equity: investments in Australian and overseas companies that are not listed on a stock exchange. They can range from large established companies to smaller, growing businesses.
    • Liquid alternatives: diversified, non-traditional strategies that may use a wide range of derivatives, equities, bonds, currencies, commodities and other liquid asset classes to get exposure to markets. Within the asset class we differentiate strategies by risk/return profiles, grouping growth-oriented (Liquid alternatives (Growth)) and more defensively-oriented (Liquid alternatives (Defensive)) strategies together.
    • Credit income: like fixed income, credit income investments involve a loan to a borrower in exchange for interest plus repayment of the principal amount at maturity. However, the loans are typically to borrowers with a lower credit rating, and as a result, may command a higher rate of return to compensate the investor for the higher risk of default. Examples of credit income investments include loans to unlisted infrastructure and real estate companies.

    From 1 November, Real assets will be broken down into:

    • Infrastructure & Real Assets, which include the utilities and facilities that provide essential services to communities (e.g. electricity, gas, water, communications, power, airports, roads, hospitals etc) that we either own directly or via unlisted or listed pooled funds.
    • Property, which includes office buildings, shopping centres and industrial estates, as well as residential property such as apartment buildings and retirement villages owned either directly or indirectly (i.e. by purchasing units in a listed or unlisted property trust). Listed property investments (often know as Real Estate Investment Trusts or REITs) are investments in their own right and their returns also reflect changes in securities prices on listed markets, which will be different (and more volatile) than the returns earned from owning direct or unlisted property investments.

    Find out more about the investment characteristics of each asset class.

  • Changes to diversified investment options from 1 November 2020

    FI Investment Option Equity Growth and growth

    1 The investment objectives do not constitute a forecast or guarantee of future performance or the future rates of return of the investment option.
    2 We may vary the asset allocation for an invest ment option from time to time. Each of the asset classes may include small cash balances for portfolio management purposes.
    3 These currency exposure targets and ranges refer to the proportion of assets that are subject to foreign exchange rate movements. The actual currency exposure in place at a point in time depends on market conditions and the liquidity needs of the investment option. In addition, the trustee may change the currency exposure targets or ranges from time to time.
    4 The Standard Risk Measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. The Standard Risk Measure is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. We assess the Standard Risk Measure for each of the investment options based on the option’s strategic asset allocation. Members should not rely exclusively on the Standard Risk Measure and should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option/s.

     

     

     

    FI Investment Option socially conscious and balanced 

    1 The investment objectives do not constitute a forecast or guarantee of future performance or the future rates of return of the investment option.
    2 We may vary the asset allocation for an investment option from time to time. Each of the asset classes may include small cash balances for portfolio management purposes.
    3 These currency exposure targets and ranges refer to the proportion of assets that are subject to foreign exchange rate movements. The actual currency exposure in place at a point in time depends on market conditions and the liquidity needs of the investment option. In addition, the trustee may change the currency exposure targets or ranges from time to time.
    4 The Standard Risk Measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. The Standard Risk Measure is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. We assess the Standard Risk Measure for each of the investment options based on the option’s strategic asset allocation. Members should not rely exclusively on the Standard Risk Measure and should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option/s.



     

     

    1  The investment objectives do not constitute a forecast or guarantee of future performance or the future rates of return of the investment option.
    2  We may vary the asset allocation for an investment option from time to time. Each of the asset classes may include small cash balances for portfolio management purposes.
    3  These currency exposure targets and ranges refer to the proportion of assets that are subject to foreign exchange rate movements. The actual currency exposure in place at a point in time depends on market conditions and the liquidity needs of the investment option. In addition, the trustee may change the currency exposure targets or ranges from time to time.
    4 The Standard Risk Measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. The Standard Risk Measure is not a complete assessment of all forms of investment risk, for instance it does not detail what the size of a negative return could be or the potential for a positive return to be less than a member may require to meet their objectives. Further, it does not take into account the impact of administration fees and tax on the likelihood of a negative return. We assess the Standard Risk Measure for each of the investment options based on the option’s strategic asset allocation. Members should not rely exclusively on the Standard Risk Measure and should still ensure they are comfortable with the risks and potential losses associated with their chosen investment option/s.
  • Changes to single asset class investment options from 1 November 2020

    The new investment objectives for the single asst class options are set out in the table below.

    Investment option Investment return objective
    Australian shares To track the return of the Aware Super Custom Index on MSCI Australia 300*, before taking into account fees, costs and tax.
    Term deposit To outperform the returns of the Bloomberg AusBond Bank Bill Index, over rolling 12-month periods, before taking into account fees, costs and tax.
    Cash To outperform the returns of the Bloomberg AusBond Bank Bill Index, over rolling 12-month periods, before taking into account fees, costs and tax.

    The change for the Australian Shares single-asset class option return objective reflects a new benchmark to be managed to from 1 October 2020. The Aware Super Custom Index incorporates our Responsible Ownership exclusions and the investment universe for these options from this date. We have partnered with MSCI to manage this index and provide reporting.

    While our other single-asset class options do not have an Aware Super Custom benchmark, the same Responsible Ownership exclusions apply.

    In addition, the new investment objective for the Australian Shares investment option also reflects the change from an ‘active’ to a ‘passive’ investment approach. Passive managers (also known as index managers) choose investments to form a portfolio that closely tracks a market benchmark (or index).

    For more information on changes in your investment options, including side-by-side comparisons of old and new characteristics, please visit vicsuper.com.au/URL TBC. Please call our member centre on 1300 366 216 within 7 days of receiving this document if you would like to receive this information in writing.


    * A custom index calculated by MSCI based on the responsible ownership criteria provided by Aware Super.
For more detailed information

You can download our pdf to see more information on changes in your investment options, including side-by-side comparisons of old and new characteristics.

Download side-by-side comparisons

Check your investment option(s)

To see which option(s) you’re invested in, refer to your latest member statement or log in to MembersOnline.

Log in to MembersOnline

We’re here to help

If you’d like more information, or if we can help, don’t hesitate to get in touch.