The MySuper fee cap is a consumer protection measure that limits the administration fees and investment fees charged to super members with small balances. It was introduced as part of the Protecting Your Super reforms, effective from 1 July 2019.
What Is the Fee Cap?
For MySuper accounts with a balance under $6,000, total administration and investment fees are capped at 3% of the account balance per year.
This means if your balance is $2,000, the maximum fee that can be charged in administration and investment fees is $60 per year (3% × $2,000).
Before this cap, many low-balance accounts were being eroded by flat dollar fees — a $3/week administration fee alone would represent 7.8% of a $2,000 balance annually.
Which Accounts and Fees Are Covered?
Accounts covered
- All MySuper products with a balance under $6,000
- The cap applies regardless of whether the account is active or inactive
Fees included in the cap
- Administration fees (flat dollar and percentage)
- Investment fees (management costs)
Fees NOT included in the cap
- Insurance premiums — insurance costs are not capped under this provision
- Transaction costs — brokerage and trading costs within the investment option
- Indirect costs (ICR) — the cap applies to disclosed fees, not all indirect costs
Why the Cap Matters
Before the 2019 reforms, low-balance accounts were being systematically eroded. The Productivity Commission found that millions of Australians had inactive or small super accounts losing money to fees faster than any investment return could compensate.
Example:
- Account balance: $3,000
- Pre-cap annual fee: $130 ($80 admin + $50 investment fee) = 4.3%
- Post-cap fee: $3,000 × 3% = $90 maximum
- Saving: $40/year
Small individually, but significant when compounded across millions of accounts and years.
What Happens to Balances Under $6,000 That Are Inactive?
Under the Protecting Your Super rules, accounts with balances under $6,000 that have been inactive for 16 consecutive months must be transferred to the ATO as unclaimed super money — unless the member actively opts to keep the account open.
Once transferred to the ATO, the money can be claimed via myGov at any time, or the ATO may proactively consolidate it into your active fund.
See Unclaimed Super — How to Find and Claim It.
Does the 3% Cap Apply to Choice (Non-MySuper) Accounts?
No — the 3% fee cap applies specifically to MySuper products. Non-MySuper (choice) investment options are not subject to this cap. However, many funds voluntarily apply low-fee structures to all members regardless.
Frequently Asked Questions
My balance just dropped below $6,000 due to fees. Does the cap apply retrospectively? The cap applies on an ongoing basis — from the point your balance falls below $6,000, fees charged in that period cannot exceed 3% p.a. It doesn’t recover past fees but limits future erosion.
Does the 3% cap mean super is free for very small balances? No — up to 3% can still be charged. On a $1,000 balance, that’s $30/year. Small balances in super still lose money to fees if there are no contributions coming in, hence the ATO transfer rule.
Are insurance premiums affected by the fee cap? No — but the Protecting Your Super reforms separately require that insurance premiums cannot be charged on inactive accounts under $6,000 unless the member opts in.
For more: MySuper, Super Fund Fees Explained, Protecting Your Super Reforms, Unclaimed Super. For advice on your super accounts, speak with a licensed financial adviser via MoneySmart.