Super Exit Fees — Are They Still Allowed in Australia?

Super exit fees were banned in Australia on 1 July 2019 as part of the Protecting Your Super Package reforms. If you have seen references to exit fees in older documents, they no longer apply to most super products.

What Were Super Exit Fees?

Before 1 July 2019, some super funds — particularly retail funds — charged members a fee when they rolled their balance out of the fund. This could be:

• A flat dollar amount (e.g., $50–$200)
• A percentage of the amount rolled out (e.g., 0.5%)

Exit fees were criticised because they created a barrier to switching, effectively locking members into underperforming or high-cost funds. The Protecting Your Super reforms abolished them.

What the Law Says Now

Under the Superannuation Industry (Supervision) Act 1993 (SIS Act), as amended in 2019:

• Exit fees are prohibited for MySuper products and other super accounts
• A fund cannot charge you a fee for rolling money out of the fund
• This applies to both full and partial rollovers

What Fees May Still Apply When Switching?

While exit fees are banned, some other costs may still apply when you move your super:

Buy/sell spread

When you exit a fund, a sell spread may apply. This is not technically an exit fee — it is a transaction cost that compensates the fund for the cost of selling assets to fund your withdrawal or rollover. Typical sell spreads range from 0.00%–0.15%.

The sell spread is different from an exit fee because:

• It compensates for an actual transaction cost (not a profit for the fund)
• It is disclosed in the PDS
• It is also charged to members who join (buy spread)

Capital gains tax crystallisation

When you roll out of a fund, the fund may need to sell assets to provide the cash. This can crystallise capital gains, which may reduce your return slightly (the CGT is paid within the fund’s accumulation pool). This is an inherent characteristic of exiting, not a fee per se.

Can I Switch Funds for Free?

Yes — in most cases, switching super funds costs nothing beyond the sell spread (which may be zero at many large industry funds). The process is:

1. Open an account at your new fund
2. Provide your old fund’s details and request a rollover (or use myGov to initiate the transfer)
3. The rollover is processed electronically via SuperStream — typically within 3 business days

There is no paperwork, no exit fee, and generally no delay.

What to Check Before Switching

Even though exit fees are gone, check before switching:

1. Insurance: Switching funds will close your existing insurance. Make sure you have applied for cover at the new fund before cancelling the old one (or that you don’t need it)
2. Defined benefit components: If you have a defined benefit component, exit rules are more complex — get advice
3. Defined benefit pensions: Cannot be rolled to most accumulation funds
4. In-progress insurance claims: Don’t switch funds while a claim is in progress

The 3% Fee Cap for Small Balances

The Protecting Your Super reforms also introduced a 3% annual administration fee cap for balances under $6,000. This is separate from the exit fee ban but protects small-balance members from excessive ongoing charges. See Protecting Your Super Reforms.

Frequently Asked Questions

Were exit fees banned for all super products, or just MySuper? The exit fee ban applies to all regulated superannuation products — not just MySuper. This includes retail funds, industry funds, corporate funds, and public sector funds. The only exception is defined benefit schemes, which have complex exit rules related to the calculation of the defined benefit itself — but these are not “fees” in the conventional sense.

Is a buy/sell spread the same as an exit fee? No — they are legally and functionally different. An exit fee was a charge the fund kept as profit when you left. A buy/sell spread compensates the fund for the actual trading costs incurred when it sells assets to fund your rollover or withdrawal. The sell spread is disclosed in the PDS, applies to all members making transactions, and does not result in profit for the fund. It is typically 0.00%–0.15%.

I found a document from my old fund that mentions exit fees — is it still valid? No — if the document predates 1 July 2019, the exit fee terms are no longer enforceable. The Protecting Your Super legislation overrides any contractual terms that permitted exit fees. If a fund attempted to charge you an exit fee after that date, they would be in breach of the SIS Act — complain to AFCA (afca.org.au).

Can a fund make me wait before processing my rollover? Super funds are required to process rollovers within 3 business days of receiving all necessary information under the SuperStream system. If a fund is deliberately delaying a rollover for reasons other than administrative ones (e.g., identity verification outstanding, in-progress insurance claim), this may breach their obligations. The ATO can take action against non-compliant funds.

Does the exit fee ban apply to pension phase (income stream) accounts? Yes. Exit fees on pension phase accounts (account-based pensions) were also banned. However, commuting (closing) a pension may have other consequences — CGT implications, insurance loss, Centrelink re-assessment — that are unrelated to fees. Get advice before closing an account-based pension.

What other reforms came with the exit fee ban? The Protecting Your Super Package (effective 1 July 2019) also: (1) introduced the 3% annual fee cap for balances under $6,000; (2) required accounts inactive for 16 months with small balances to be transferred to the ATO for safekeeping; (3) cancelled insurance on inactive accounts unless the member opted in; and (4) required the ATO to proactively reunite lost super with active accounts. Together, these reforms saved Australian workers an estimated $570 million per year.

For more: How Are Super Fees Calculated?, Protecting Your Super Reforms, How to Consolidate Your Super, MySuper Fee Cap. For advice on your situation, speak with a licensed financial adviser via MoneySmart.