What are the rules around charging fees to my super account?

Here's a breakdown of the rules around charging fees to your super account, based on the legislation you provided.

In Plain English

Basically, there are rules about what types of fees super funds can charge and how they can charge them, especially for MySuper products (which are the simple, default super options). Here's the gist:

Types of Fees Allowed: Super funds can only charge specific types of fees, such as administration fees (for running the fund), investment fees (for managing investments), buy-sell spreads (for transaction costs when buying/selling assets), switching fees (for moving between investment options), exit fees (for closing your account), and activity fees (for specific actions you request or that are legally required). Note that exit fees are now largely prohibited.
Fairness in Fee Charging: Generally, if a fee is charged, it should be charged in the same way to all members holding the same MySuper product. This can be a flat fee, a percentage of your account balance, or a combination of both.
Cost Recovery: Some fees, like buy-sell spreads, switching fees, activity fees and insurance fees, can only be charged to cover the actual costs incurred by the fund.
Fee Caps for Low Balances: If your super account balance is below $6,000, there's a limit on how much the fund can charge you in administration and investment fees.
Lower Fees for Employees: If your employer contributes to your super fund, the fund can arrange with your employer to give you lower administration fees.
No Entry or Exit Fees: Super funds can't charge you fees just for joining (entry fees) or leaving (exit fees, with limited exceptions).
Advice Fees: If you receive financial advice related to your super, the fees for that advice can be charged to your account, but only if you agree to it.
Insurance Fees: Insurance fees can be charged to your account to cover the cost of premiums and providing insurance to members.
Performance-Based Fees: If your fund uses investment managers and pays them based on how well your investments perform, there are rules to ensure these fees are structured to encourage good performance and discourage poor performance.

Detailed Explanation

The legislative context provides a detailed framework for the types of fees that can be charged to a superannuation account, particularly within the context of MySuper products, and outlines rules to ensure fairness and cost recovery.

1. Types of Fees Permitted for MySuper Products:

Section 29V of the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012 and Chunk 67 of the Superannuation Industry (Supervision) Act 1993 outline the types of fees that can be charged in relation to a MySuper product:

Administration Fee: A fee relating to the administration or operation of the fund.
Investment Fee: A fee relating to the investment of the assets of the fund, including fees for expertise and performance.
Buy-Sell Spread: A fee to recover transaction costs incurred in the sale and purchase of fund assets.
Switching Fee: A fee to recover the costs of switching between investment options within the fund.
Exit Fee: A fee to recover the costs of disposing of a member's interests in the fund. Note that Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 has removed exit fees.
Activity Fee: A fee directly related to an activity engaged in at the member's request or required by law.
Advice Fee: A fee relating directly to the costs incurred by the trustee due to the provision of financial product advice to a member.
Insurance Fee: A fee relating directly to insurance premiums paid by the trustee or costs incurred in relation to the provision of insurance for a member.

2. Charging Rules:

Section 29VA of the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012 and Chunk 67 of the Superannuation Industry (Supervision) Act 1993 specify the charging rules for MySuper products, ensuring fees are applied fairly:

Same Flat Fee: All members holding the MySuper product are charged the same flat fee.
Same Percentage of Account Balance: All members are charged the same percentage of their account balance.
Combination of Flat Fee and Percentage: All members are charged a combination of a flat fee and a percentage of their account balance.
Fees Related to Specific Actions: Buy-sell spreads, switching fees, and activity fees can only be charged to members for whom the relevant action is taken.
Lifecycle Differentiated Investment Fees: Investment fees can vary based on age cohorts, with a maximum of 4 age cohorts.
Advice Fees: Advice fees can be charged if they relate directly to financial product advice provided to a member, the member holds a MySuper product, and the fee is charged to the member.
Insurance Fees: Insurance fees can be charged if they relate directly to insurance premiums or costs for providing insurance to a member, the member holds a MySuper product, and the fee is charged to the member.
Fees for Members with Low Balances: Administration or investment fees can be charged at a reduced amount in accordance with section 99G of the Superannuation Industry (Supervision) Act 1993, as amended by the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019.

3. Administration Fee Exemption for Employees:

Section 29VB of the Superannuation Legislation Amendment (MySuper Core Provisions) Act 2012 and Chunk 69 of the Superannuation Industry (Supervision) Act 1993 allows for lower administration fees for employees of an employer-sponsor under certain conditions:

The fee is charged to all members holding the MySuper product.
The employer-sponsor contributes to the fund for the benefit of employee members.
The trustee has an arrangement with the employer-sponsor to secure lower administration fees for employee members.
The fee complies with specific rules regarding flat fees, percentage of account balance, or a combination of both.

4. Cost Recovery Basis:

Section 29VC of the Superannuation Industry (Supervision) Act 1993 states that activity fees and insurance fees must be charged on a cost recovery basis, meaning the fee cannot be more than the actual cost incurred.

5. Performance-Based Fees:

Section 29VD of the Superannuation Industry (Supervision) Act 1993 outlines requirements for arrangements with investment managers where fees are based on performance:

The base fee must be set or adjusted to incentivize the investment manager to obtain the performance-based fee.
The period for determining entitlement to the performance-based fee must be appropriate.
The investment's performance must be measured against an appropriate benchmark.
The performance-based fee must be worked out on an after-costs and after-tax basis.
The arrangement must include disincentives for poorly performing investments.

6. No Entry Fees:

Section 99B of the Superannuation Legislation Amendment (Further MySuper and Transparency Measures) Act 2012 prohibits entry fees.

7. Fee Cap on Low Balances:

Section 99G of the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 introduces a fee cap on low balances:

Applies if a member's account balance is less than $6,000 at the end of the income year.
Caps the total combined amount of administration fees, investment fees, and certain indirect costs that can be charged.
Requires a refund of any excess fees charged.

8. Defined Fees for Superannuation Products:

Corporations Regulations 2001 defines the various fees for superannuation products, ensuring consistency in how these fees are described and disclosed.

9. Disclosure Requirements:

Corporations Regulations 2001 also mandates the inclusion of fees and costs information in the Product Disclosure Statement (PDS), including an example of annual fees and costs.

Caveats:

This information is based solely on the provided legislative context. A comprehensive understanding of superannuation fee rules would require a review of all relevant legislation, regulations, and case law, as well as consideration of the specific details of your superannuation product.