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:
- Open an account at your new fund
- Provide your old fund’s details and request a rollover (or use myGov to initiate the transfer)
- 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:
- 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)
- Defined benefit components: If you have a defined benefit component, exit rules are more complex — get advice
- Defined benefit pensions: Cannot be rolled to most accumulation funds
- 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.
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.