Superannuation funds have been told they will have to look to either increasing fees or utilising their reserves to cover the costs of the new fee cap applying to low-balance superannuation funds.
The Australian Prudential Regulation Authority (APRA) made the position clear in a question and answer exercise, noting that the introduction of the fee cap may “require some costs that were previously borne by members with balances less than $6,000 to be recovered through other avenues”.
“In this regard, APRA would expect that RSE licensees would recover these costs in a manner that is in accordance with its duties to members, whether that is by making changes to fee structures or via (in the short term) the use of an appropriate reserve,” the APRA document said.
However, it noted that such an approach would require funds to have regard to the best interests of its members, prioritising its duties to and the interests of members, and treating members fairly within and between classes of beneficiaries.
The APRA document also pointed to the possible complexities likely to be associated with instances where fees were in appropriately charged to low-balance members.
It said that trustees might, if necessary, refund excess fees that had been charged over the three per cent cap at the end of their income year.
“If at the end of an income year a trustee determines that a member’s account balance that relates to the product is below $6,000 and the fees that have been charged are in excess of the three per cent fee cap, the trustee is required to refund the excess fees to the member,” APRA said.
“Trustees have up to three months after the end of the income year to provide the refund, or in the case of a member leaving a fund part way through a year, three months from the day the member left the fund.”
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