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Fee structures that grow: rand, salary, and asset-based charges over time

Trajectory by recovery base — sequel to fee vocabulary and fee-drag, without invented averages.

Topics · ~8 min · Education only

From fee vocabulary and fee-drag to trajectory — why the recovery base matters

A rand-per-member-per-month admin fee, a salary- or contribution-linked charge, and an asset-based investment fee do not grow the same way. When boards only see a single headline percentage, they miss path dependence.

Cheapest-looking today is not automatically cheapest over a career — and “always prefer fee type X” is not a line this desk will write. We also do not invent industry-average TER, RSC, or EAC percentages.

Rand PMPM, % of salary/contribution, % of assets — how each path behaves (qualitative)

Rand-per-member-per-month charges can look small early and heavier as a percentage of assets when balances are still thin — then lighter as a share of assets if the book matures and the rand fee stays flat. Salary- or contribution-linked charges move with payroll and contribution design. Asset-based charges scale with the portfolio.

Keep the discussion qualitative unless the pack shows fund-supplied numbers. Hypothetical Fund A / Fund B path sketches elsewhere are teaching aids only — not quotes.

What ASISA RSC asks boards to see: actual recovery method and multi-year summaries

ASISA’s Retirement Savings Cost (RSC) disclosure standard is aimed at participating employers and boards, not individual members. It asks for all charges, reflection of the actual recovery method, and multi-period summaries (for example Year 1, Years 1–3, 1–5, 1–10) as a percentage of average assets over the period.

Sample tables in the Standard are illustrations inside the Standard — not South African market averages. We will not quote them as research findings. RSC binds ASISA members as a standard; statutory disclosure duties remain separate — do not treat RSC as a universal statute on every fund.

Keeping RSC, member EAC and fact-sheet TER/TC in separate lanes

Board/employer RSC packs, member Effective Annual Cost (EAC) figures, and fact-sheet Total Expense Ratio / Transaction Cost lines answer different questions for different audiences. Collapsing them into one number is a process failure.

Use shipped pages for reading order: fee-types for vocabulary, TER governance for pack lines, reading fact sheets for calm order. This piece only adds the trajectory question by recovery base.

Checklist — trajectory questions before you accept a headline %

• For each major charge line: recovery base stated — rand PMPM, % of salary/contribution, % of assets, or hybrid.
• Employer/board cost disclosure shows multi-year summaries (e.g. RSC Year 1 / 1–3 / 1–5 / 1–10), not only a current-year headline.
• If admin is largely rand-based: pack shows what happens to cost as % of assets as the book matures.
• If investment fees are largely asset-based: pack shows how growth in default portfolios changes rand drag over a career.
• Advice/consultant charges visible in the RSC Advice component (or clearly footnoted as zero/facilitated).
• Sample-member RSC tables (different salary / starting assets) used to avoid one-size % thinking — labelled illustrative, not promises.
• RSC (board/employer), member EAC, and fact-sheet TER/TC kept distinct — link shipped pages for reading order.
• Review trigger when recovery methods or default portfolios change — process question, not a procurement RFP in this article.

Questions to table (no quotes, no invented averages)

• What is the recovery base for each major charge — rand, salary/contribution, assets, or hybrid?
• Where are the multi-year RSC (or equivalent) summaries, not only a current headline %?
• If admin is rand-based, what happens to cost as a share of assets as balances grow?
• Are RSC, member EAC, and TER/TC being compared as if they were the same number?
• We do not publish industry-average TER/RSC/EAC percentages or “always prefer fee type X” advice — ask for fund-supplied disclosure.