Fees and costs guide (AP.7) Issued 1 January 2016 The information in this document forms part of the ESSSuper Accumulation Plan Product Disclosure Statement dated 1 January 2016. Contents Fees and costs 2 Additional explanation of fees and costs 4 Defined fees 5 Need help with your super? 7 This Incorporated Guide has been issued to help you make an informed decision about ESSSuper s products, features and benefits. It s of a general nature only and doesn t take into account your personal or financial objectives, situation or needs. Before making a decision about an ESSSuper product, consider seeking professional advice from a licensed financial advisor. The information in this document is up-to-date at the time of issue but may change from time to time. When a change is not materially adverse, it will be updated and published on the ESSSuper website at www.esssuper.com.au. A paper copy of any updated information will be provided without charge on request. CONSUMER ADVISORY WARNING Did you know? Small differences in both investment performance and fees and costs can have a substantial impact on your long term returns. For example, total annual fees and costs of 2% of your account balance rather than 1% could reduce your final return by up to 20% over a 30-year period (for example, reduce it from $100,000 to $80,000). You should consider whether features such as superior investment performance or the provision of better member services justify higher fees and costs. Your employer may be able to negotiate to pay lower administration fees. Ask the fund or your financial adviser. To find out more If you would like to find out more, or see the impact of the fees based on your own circumstances, the Australian Securities and Investments Commission (ASIC) website (www.moneysmart.gov.au) has a superannuation calculator to help you check out different fee options. To help compare different superannuation products, superannuation trustees are required by law to include the above statement in a PDS. However, ESSSuper does not negotiate administration fees. The fees are shown inclusive of Goods and Services Tax (where applicable).
Fees and costs The table below shows fees and other costs that you may be charged. These fees and costs may be deducted from your money, from the returns on your investment or from ESSSuper s Accumulation Plan assets as a whole. Other fees, such as activity fees, advice fees for personal advice and insurance fees, may also be charged, but these will depend on the nature of the activity, advice or insurance chosen by you. Taxes and insurance costs are set out in the How super is taxed guide (AP.2) and Insurance guide (AP.4) available at www.esssuper.com.au/pds. You should read all the information about fees and costs because it is important to understand their impact on your investment. Type of fee Amount How and when paid Investment fee Nil Not applicable. Administration fee Account keeping fee Administration fee $52 p.a., plus 0.25% p.a. of your account balance (subject to a combined maximum of $1,500 p.a.) For emergency services employees and their spouses the administration fee is subject to a combined minimum of $78 p.a. 1 Buy-sell spread Nil Not applicable. Switching fee Nil Not applicable. Exit fee Nil Not applicable. Advice fees Nil Not applicable. relating to all members investing in a particular investment option Other fees and costs 2 Deducted annually from your account at the end of each financial year and pro-rated upon closure of your account. Investment option Investment Management Fee Investment Performance Fee 3 Total Indirect Costs (2014/15) 4 Shares Only 0.65% 0.20% 0.85% High Growth 0.81% 0.20% 1.01% Growth (default option) 0.74% 0.17% 0.91% Balanced 0.63% 0.14% 0.77% Conservative 0.37% 0.05% 0.42% Defensive 0.18% 0.01% 0.19% Term Deposit 0.06% Nil 0.06% Cash 0.06% Nil 0.06% Indirect costs are deducted on the last day of the month from monthly earning rates before they are applied to your account. Indirect costs are not deducted directly from member accounts. Notes: 1. A discount may apply for emergency services employees and their spouses where the administration fee is above $78. Refer to page 5 for an explanation of the discount and an example which illustrates how the discount will apply. 2. Other service and activity fees may apply. Additional fees may apply if you consult a financial adviser. The Financial Services Guide and Statement of Advice from the financial adviser will set out these fees. For more information see Additional explanation of fees and costs. 3. Refer to page 7 for further information on the investment performance fees. 4. The indirect cost ratio is based on the 2014/15 financial year. As such, these may change from year to year. 2
Example of annual fees and costs for the Growth (default) investment option This table gives an example of how fees and costs in the Growth option for this superannuation product can affect your superannuation investment over a 1 year period. Use this table to compare ESSSuper s product with other superannuation products. Example: the Growth investment option Balance of $50,000 Investment fees Nil For every $50,000 you have in the Growth investment option you will be charged $0 each year. PLUS Administration fee PLUS Account keeping fee PLUS Indirect costs for the Growth investment option equals Cost of product 0.25% p.a. 1 And, for every $50,000 you have in the Growth option you will be charged $125 each year. $52 p.a. 1 And, account keeping fee of $52 each year ($1.00 per week) +0.91% p.a. 2 And, indirect costs of $455 each year will be deducted from your investment If your balance was $50,000 then for that year you will be charged fees of $632 3 for the Growth investment option. 1. Administration fees deducted from your account. 2. Estimated indirect costs (including performance fee). 3. Additional fees may apply. Note. This example is illustrative only and is based on the factors stated and assumes a balance of $50,000 for the year. The example should not be taken to contain or provide an estimate of the earnings you will receive. 3
Additional explanation of fees and costs Type of fee or cost Amount How and when paid Family law request for information Member No fee is payable for information for up to three appropriate dates within a 12 month period. If you require information for more than three appropriate dates, a fee of $100 for each block of three additional dates is payable. Non-member spouse $250 for provision of information for up to three appropriate dates within a 12 month period. If you require information for more than three appropriate dates, a fee of $100 for each block of three additional dates is payable. Payable by cheque at the time the request is made. Freedom of information request Financial advice Insurance costs Tax $27.20 per application for information (see Freedom of information on page 7). ESSSuper has an arrangement with Adviser Network Pty Ltd (under their Australian Financial Services Licence No. 232729) to provide members with financial product advice. Your first appointment with a financial planner is free of charge. If you want financial advice an hourly rate is charged for the preparation of a full financial plan. This fee is based on the time it takes to prepare, present and implement the plan. Different fees apply for single topic financial advice. Contact ESSSuper on 1300 650 161 for further details on fees. Insurance premiums may be deducted from your account. For details on insurance costs refer to Insurance in the PDS available at www.esssuper.com.au/pds Tax may be deducted from your account. For details on tax, refer to the How super is taxed guide (AP.4) available at www.esssuper.com.au/pds Payable by cheque at the time the request is made. Payable by cheque or credit card at the time the request is made. The fee can be deducted from your account if the advice is super related. Deducted annually from your account at the end of each financial year and pro-rated upon closure of your account. 4
Administration fee discount for emergency services employees and their spouses If your Administration fee is calculated to be greater than $78 p.a., you will receive a discount in accordance with the following table: Financial year Discount 2015/16 60% of the difference between $78 and the calculated Administration fee. 2016/17 40% of the difference between $78 and the calculated Administration fee. 2017/18 20% of the difference between $78 and the calculated Administration fee. 2018 onwards No discount and removal of minimum $78 Administration fee. Example for the 2015/16 financial year Assuming you have a balance of $50,000, your administration fee will be calculated in accordance with the following formula (as set out in the Fees and Costs table above): $52 p.a. plus 0.25% p.a. of your account balance (subject to a combined maximum of $1,500 p.a.) i.e. $52 + ($50,000 x 0.25%) $52 + $125 $177 As the administration fee is calculated to be above $78, you will be eligible for a discount of 60% of the difference between $78 and the calculated administration fee i.e. ($177 - $78) x 60% $59.40 discount $177 - $59.40 $117.60 administration fee Once you leave emergency services employment no discount to your or your spouse s Administration fee will apply. Member Protection The annual administration fee on superannuation accounts where the balance does not exceed $1000 will not exceed the investment earnings credited. Defined fees Activity fees A fee is an activity fee if: a. the fee relates to costs incurred by the trustee of the superannuation entity that are directly related to an activity of the trustee: i. that is engaged in at the request, or with the consent, of a member; or ii. that relates to a member and is required by law; and b. those costs are not otherwise charged as an administration fee, an investment fee, a buy-sell spread, a switching fee, an exit fee, an advice fee or an insurance fee. Administration fees An administration fee (includes account keeping fee) is a fee that relates to the administration or operation of the superannuation entity and includes costs incurred by the trustee of the entity that: a. relate to the administration or operation of the entity; and b. are not otherwise charged as an investment fee, a buysell spread, a switching fee, an exit fee, an activity fee, an advice fee or an insurance fee. Advice fees A fee is an advice fee if: a. the fee relates directly to costs incurred by the trustee of the superannuation entity because of the provision of financial product advice to a member by: i. a trustee of the entity; or ii. another person acting as an employee of, or under an arrangement with, the trustee of the entity; and b. those costs are not otherwise charged as an administration fee, an investment fee, a switching fee, an exit fee, an activity fee or an insurance fee. 5
Buy-sell spreads A buy-sell spread is a fee to recover transaction costs incurred by the trustee of the superannuation entity in relation to the sale and purchase of assets of the entity. * Exit fees An exit fee is a fee to recover the costs of disposing of all or part of members interests in the superannuation entity. * Indirect cost ratio The indirect cost ratio (ICR), for a product or an investment option offered by a superannuation entity, is the ratio of the total of the indirect costs for the product or investment option, to the total average net assets of the superannuation entity attributed to the product or investment option. Note: A dollar-based fee deducted directly from a member s account is not included in the indirect cost ratio. Switching fees A switching fee is a fee to recover the costs of switching all or part of a member s interest in the superannuation entity from one class of beneficial interest in the entity to another. * * The above definitions are prescribed under legislation. ESSSuper does not charge buy-sell spreads, exit fees, investment fees or switching fees (although some of these fees may be charged by investment managers see Transaction costs and Investment performance fees below). Transaction costs Certain transaction costs in acquiring and disposing of assets (such as brokerage and government duties) are incurred by ESSSuper by managing the fund s investments. For example, if your investment option includes listed securities, this cost is in addition to any management costs. We estimate that transaction cost in acquiring and disposing of listed equities would typically be 0.10% to 0.35% of the value of the underlying security. Such transaction costs are taken into account at the time the assets of the Fund are valued. You do not incur direct transaction costs (and the Trustee does not apply a buy/sell spread) when setting up your account, making switches or withdrawals. Investment fees An investment fee is a fee that relates to the investment of the assets of a superannuation entity and includes: a. fees in payment for the exercise of care and expertise in the investment of those assets (including performance fees); and b. costs incurred by the trustee of the entity that: i. relate to the investment of assets of the entity; and ii. are not otherwise charged as an administration fee, a buy-sell spread, a switching fee, an exit fee, an activity fee, an advice fee or an insurance fee. * 6
Investment management and performance fees Investment managers, administrators and advisers charge a fee to invest your funds and manage the assets in each investment option. Investment costs will vary each year depending on the investment managers used during the year. Investment costs are calculated as a percentage of members balances and deducted from monthly earning rates before they are applied to your account. Some investment managers can also charge additional performance fees if their investment returns are above an agreed benchmark return. Investment performance fees will only be paid where the investment manager exceeds the benchmark return, therefore in some years performance fees may not be paid. The actual performance fees will vary each year. As investment performance costs are not known until after the end of the financial year, the indirect cost ratio shown in the table on page 2 include the actual performance fees for the 2014/15 financial year. Performance fees are indirect costs and do not form part of the administration fee. Tax credits or deductions ESSSuper operates on a not-for-profit basis. As a result, tax credits and deductions generated through expenses of the Fund may be utilised to offset expenses related to the management of the Accumulation Plan and therefore reduce the cost to members. Fees and costs shown in the table on page 2 are the net amount levied to your account. Freedom of information The Freedom of Information (FOI) Act gives members the right to request information held by ESSSuper such as: documents in relation to their personal affairs; and documents in relation to the operation of ESSSuper The current FOI application fee is $27.20. The level of the fee is prescribed by the Victorian Government and is increased at 1 July each year. All requests for information under FOI must be made in writing to: Manager, Freedom of Information ESSSuper Postal address GPO Box 1974 Melbourne Victoria 3001 Changing fees ESSSuper can change the amount of fees from time to time without consent. However, you will be notified of all increases in fees at least 30 days in advance of the charge becoming effective. Need help with your super? call our Member Service Centre on 1300 650 161 (for emergency services members) 1300 655 476 (for state super members) visit www.esssuper.com.au for tips, tools and calculators book in for a free super seminar online at www.esssuper.com.au call us to arrange a free individual consultation with a Member Education Consultant If you want personal financial advice tailored to your individual circumstances, we can arrange a referral to a licensed financial planner that charges on a fee for service basis. ESSSuper has an arrangement with Adviser Network Pty Ltd for Adviser Network and its authorised representatives to provide members with financial advice under Adviser Network s Australian Financial Services Licence (No. 232729). Appointments are located at ESSSuper s office. 7
Proudly serving our members Level 16, 140 William Street Melbourne VIC 3000 GPO Box 1974 Melbourne VIC 3001 T 1300 650 161 for emergency services members 1300 655 476 for state super members F 1300 766 757 info@esssuper.com.au www.esssuper.com.au ESSSuper Member Education Advisers and Financial Planners are authorised representatives of Adviser Network Pty Ltd (Adviser Network). Adviser Network holds a current Australian Financial Services Licence No. 232729 and is responsible for the financial services provided to you by it or its authorised representatives. ESSSuper has an arrangement with Adviser Network Pty Ltd to provide financial advice to ESSSuper members. ESSSuper pays Adviser Network a fee for this service. Neither the Board, nor the Victorian Government, guarantee or endorse any recommendations made by Adviser Network/its authorised representatives, or are responsible for the advice and actions of Adviser Network/its authorised representatives. This Incorporated Guide (which forms part of the ESSSuper Accumulation Plan Product Disclosure Statement) was prepared and issued by the Emergency Services Superannuation Board (Board) ABN 28 161 296 741, the Trustee of the Emergency Services Superannuation Scheme ABN 85 894 637 037 (ESSSuper). The Board and ESSSuper were both established under the Emergency Services Superannuation Act 1986 (Act). ESSSuper is an exempt public sector superannuation scheme. Examples in this document are for illustration purposes only. They re not intended to be recommendations or preferred courses of action. Note that all investments carry risks and past investment performance gives no indication of future performance. Benefits in ESSSuper s Accumulation Plan are not guaranteed or underwritten by the Victorian Government or ESSSuper, and ESSSuper does not come under the jurisdiction of the Superannuation Complaints Tribunal. ESSSuper provides insurance cover to eligible members through group insurance policies that the Board holds with The Colonial Mutual Life Assurance Limited ABN 12 004 021 809 AFSL 235035 otherwise known as CommInsure. Copies of the insurance policy documents, are available on request. Cover is subject to the terms of the applicable policy.