Find information about TWUSUPER’s investment costs and related fees, reserves, and crediting rates, including types of crediting rates, and how they’re calculated, adjusted and applied to your account.
Investment costs and related fees
The fees described below are correct as at 1 July 2017 and may be revised or adjusted by the Trustee from time to time. We'll give you at least 30 days' notice of any material increase in fees, unless the increase arises only from an increase in costs.
Estimated investment costs vary for each investment option and may change throughout the year due to timing, cash flow, changes to investment managers, changes in asset allocation and other factors. Investment related expenses (such as investment manager fees and transaction costs) at Fund level are included as investment fees. Investment related expenses incurred in making investments through underlying vehicles (such as trusts) are included in the indirect cost ratio. Investment fees and indirect costs are deducted from the investment returns of each investment option before the crediting rates of our investment options are determined - they are not deducted from your account. These costs are estimated and based on information for the financial year ended 30 June 2017 and the Fund's strategic asset allocation as at 30 June 2017. If it becomes apparent that actual costs will vary in a way that is materially adverse, the estimated costs will be updated.
Performance related fee
In some cases investment managers are paid a performance related fee if they exceed agreed performance targets. The estimated investment fee and indirect cost ratio for the Balanced (MySuper) and Equity Plus investment options include a performance related fee, payable if investment managers exceed agreed performance targets.
If an investment manager earns a performance related fee, it is passed onto members as an adjustment to the investment performance of the relevant investment option. A performance related fee will not always be payable. Because performance targets vary between investment managers, it is not possible to provide an accurate figure for the performance related fees. The performance related fees are therefore estimates, based on:
- the strategic asset allocation of the relevant investment option as at 30 June 2017, and
- outperformance of 1% by the investment managers, based on indicative annualised calculations using fee information provided by investment managers (including underlying investment managers) for periods up to approximately 30 June 2017.
The actual performance related fee will vary depending on the actual return and agreements in place with relevant investment managers. The use of estimates is not an indication or guarantee of future performance.
Expense recovery fee
The administration fee includes an expense recovery fee that is deducted from Fund assets before crediting rates are determined. The expense recovery fee includes estimated operational costs such as administration charges, legal fees, office and communication expenses and other miscellaneous expenses incurred by the Trustee in the Fund's day-to-day operations. The calculation of this fee is based on the estimated costs incurred for the financial year ended 30 June 2018. If it becomes apparent that actual costs will vary in a way that is materially adverse, the estimated costs will be updated.
Transactional and operational costs
Transactional and operational costs (T&O Costs) include costs such as brokerage, clearing costs and stamp duty associated with trading to implement the relevant investment option strategies. Some of these costs are additional costs to the investor, as shown in the table below, but most of them have already been included in either the investment fee or indirect cost ratio for the option. T&O Costs are paid out of the assets of the Fund or deducted from the underlying vehicles before the crediting rates of our investment options are determined.
T&O Costs for the financial year to 30 June 2017 are estimated as follows:
Total T&O costs
T&O costs already included in other fees and costs
Additonal cost to you
The costs for the current period may vary from these amounts and may be greater (or lower) than past experience.
Borrowing costs refers to costs relating to any credit facility used within an underlying vehicle as part of implementing the investment strategy of each option. The estimated borrowing costs (if any) for each of the investment options for the year ending 30 June 2017 are set out in the table below:
Net borrowing cost (estimated for year to 30 June 2017)
The costs for the current period may vary from these amounts and may be greater (or lower) than past experience. Borrowing costs are an additional cost to members. They are not included in costs disclosed in the investment fees or indirect cost ratios shown for each investment option.
Property operational costs
Property operational costs are transactional and operational costs that relate to the management of real property held within an investment option. The estimated property operational costs (if any) for each of the investment options for the year ending 30 June 2017 are set out in the table below:
Property operational cost (estimated for year to 30 June 2017)
The costs for the current period may vary from these amounts and may be greater (or lower) than past experience. Property operational costs are an additional cost to members and have not been included in costs disclosed in the investment fees or indirect cost ratios shown for each investment option.
The Fund maintains two reserves which protect against operational and strategic risks to the Fund.
The Operational Risk Reserve (ORR) is designed to protect members' investments against adverse events resulting from failed processes or systems and external events such as fraud. The Strategic Risk Reserve (SRR) is designed to protect members' investments against losses resulting from strategic and reputational risk events.
The ORR's target level is 0.275% of net Fund assets, and the SRR's target level is 0.10% of net Fund assets. As at 30 June 2017 both reserves were funded to their target levels and had no impact on the calculation of the indirect cost ratio.
Types of crediting rates
Investment returns are determined by a crediting rate. The crediting rate is equal to the investment earnings for each investment option less estimated tax, investment management and other costs. Crediting rates can be either positive or negative as they depend on investment performance.
There are two types of crediting rates:
- interim crediting rates - generally issued weekly on a Wednesday
- declared crediting rates - usually issued monthly by the end of the following month (for example, the rate for 31 October will usually be declared by 30 November).
How crediting rates are calculated
Interim crediting rates are based on estimated investment earnings for the period since the last monthly crediting rate less estimates for tax, investment management fees and other costs.
Investment earnings are generally calculated in the following way:
Information used to determine crediting rates
The actual investment earnings are available and updated on a weekly basis.
and Equity Plus
We use the benchmark asset allocation for each investment option and movements in market indices, for example, Australian and overseas share markets, from the beginning of the month.†
There are times, however, when the latest interim crediting rate applied to your account will depend on when a transaction (such as a switch, withdrawal or transfer to another super fund or another division of TWUSUPER) occurs.
When the transaction occurs
Interim crediting rate applied
At a time when market data or other investment data isn't available to calculate the interim crediting rate (for example, early in the month).
Cash rate, for example, Australian Financial Markets Association (AFMA) rate. The cash rate will be replaced by the interim crediting rate when market data is available.
At a time when market data is available to calculate the interim crediting rate.
Rate is calculated based on market data.
†The Trustee may replace the use of benchmark allocations and market indices with actual investment earnings for some investment managers.
Declared crediting rates are based on the investment earnings for each month less estimates for tax, investment management fees and other fees (estimated because this information is not always available for each month).
At the end of the financial year, the interim June crediting rates are generally reviewed to take account of any difference between:
- estimates for taxes and fees applied during that year, and
- updated actual taxes and fees incurred by the Fund during the year (or if unavailable, updated estimated figures).
This is to ensure that the Fund's net assets cover members' total account balances at 30 June. The June crediting rates are usually declared in August each year.
How crediting rates are applied to your account
Here are some examples of when and how crediting rates are applied to your account:
If you have an account for the full financial year
Crediting rate type
The monthly declared crediting rates for the full 12 months are applied to your account.‡
‡ This is provided you still hold the account when the final crediting rate for the previous June is declared (usually in August each year). If you switch investment options before the final crediting rate for the previous June is declared, investment earnings will be applied to your super account at the time of the switch. In addition, when the final crediting rate for June is declared, investment earnings will be re-calculated and applied to your super account if the final declared June crediting rate is different to the interim June crediting rate.
If you switch investment options, withdraw or transfer to another super fund or another division of TWUSUPER
Crediting rate type
The day before the transaction is processed
The monthly declared rates and the latest interim crediting rates are applied pro rata on a daily basis since the previous 1 July or the last investment option switch, withdrawal or transfer, whichever is later.
When the change becomes effective depends on how and when we receive your request:
- Online requests received by midnight (AEDT/AEST) on a Friday will normally be effective the following Wednesday.
- Paper requests received by 5pm (AEDT/AEST) on a Friday will normally be effective the following Wednesday.
If you send us more than one change request in the same week, only the last request received before that week’s deadline will apply.
Crediting rate adjustments
If there is an error in calculating a crediting rate, we may need to make an adjustment. If this error affects your account, it will be amended to reflect the adjusted rate as long as the amount is material. An amount is generally considered to be material if the adjustment is at least 0.3% of your account balance.
The Trustee may apply a lower threshold at its discretion. If you have left the Fund, the Trustee may apply a fixed dollar minimum before it pays compensation. The fixed dollar minimum is currently $20.