Retirement
Super terminology explained: Understanding the ICR
If you’re looking to optimise your retirement by finding the best super fund, you might come across something called the ICR. Here’s what you need to know about it.
Super terminology explained: Understanding the ICR
If you’re looking to optimise your retirement by finding the best super fund, you might come across something called the ICR. Here’s what you need to know about it.
What is the ICR?
In the world of superannuation funds, the acronym ICR stands for indirect cost ratio. It is most commonly used and found within the product disclosure statement of a given super fund.
The ICR is an estimate of the costs related to the management of a super fund. This can include stuff like management fees, performance fees, legal compliance and transactions costs plus any accounting or auditing fees.
The higher the ICR of a given fund, the more money the fund collects for itself. Importantly, though, the ICR is deducted from investment returns rather than your fund’s balance.
In addition, the ICR is not something that’s set in stone. It can change from time to time, depending on the terms of the fund’s product disclosure statement. For example, in a year when a fund might significantly outperform expectations, the ICR may rise to account for performance bonuses.
The ICR is different to other super fees like investment fees or administration fees in that it is not static. It doesn’t just vary based on your choice of fund, but also the type of investment strategy you opt for and how successful.
There’s room for each fund to manage what is included or excluded as part of the ICR slightly differently, but they’re usually summarised into an annual rate for readability. For example, 0.04 per cent per annum.
Should the ICR affect your choice in super?
Beyond the balance of risk and rewards involved, Stockspot’s most recent FatCat report found that fees are the next most important factor when choosing a superannuation fund.
“You can’t control how markets perform, but you can control how much you pay for the management of your hard-earned money,” the report said.
“The smaller that fee, the more money left over for you. Our research shows that lower-cost super funds tend to outperform higher-cost alternatives across all categories.”
According to them, “There is a clear correlation between high fees and long-term underperformance in superannuation.”
RELATED ARTICLES
About the author
About the author
Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
Superannuation
Australia's super performance test transforms investing: What's the next move?
APRA’s latest performance test has done more than name and shame lagging super options; it has rewired investment strategy, compressed fees and accelerated consolidation across the $3Read more
Superannuation
Australia's super test dilemma reform could boost long-term gains while keeping accountability sharp
APRA’s latest performance test results have reignited a structural debate: can Australia hold funds to account while still backing the nation’s long-horizon investment needs? With the government ...Read more
Superannuation
Super funds rethink strategy as APRA's performance test hits a fork in the road
The latest performance test results have reignited debate over Australia’s superannuation benchmarking regime and prompted a formal government review. Behind the headlines, boards are quietly rewiring ...Read more
Superannuation
Aware Super enhances digital tools for financial advisers, boosting efficiency and client engagement
Aware Super has unveiled a suite of new digital features designed to streamline the workflow for financial advisers and their clients. This significant upgrade includes direct data feeds to Xplan and ...Read more
Superannuation
Super funds flip the script as APRA's performance test sparks strategic overhaul
Australia’s performance test has lifted the floor on retirement outcomes—and divided the industry in the process. After early shockwaves, failure rates have fallen and fees have trended down, but ...Read more
Superannuation
Rewiring Australia’s super performance test: from compliance brake to capital engine
Can an accountability tool double as a nation-building lever? Canberra’s review of the superannuation performance test aims to preserve member protection while freeing funds to back long-dated assets ...Read more
Superannuation
Superannuation guarantee rate rises to 12 per cent as parental leave changes take effect
The superannuation guarantee rate has increased from 11.5 per cent to 12 per cent from Tuesday, with super contributions also being added to Commonwealth Parental Leave Pay for the first time. Read more
Superannuation
Rest's Sustainable Growth option achieves highest sustainability classification
Rest superannuation fund has achieved the highest sustainability classification for its Sustainable Growth investment option from the Responsible Investment Association Australasia. Read more
