Page 61 - Profile's Unit Trusts & Collective Investments - March 2026

Costs and pricing Chapter 3

Because RiY is a forward-looking estimate, it has several limitations:
R It depends on projected returns, which are unknown. Lower projected returns make RiY appear
smaller, even though costs haven’t changed.
R It includes upfront costs, so the RiY improves over longer time periods as once-off charges are
spread out.
R It ignores penalties for reducing or stopping contributions, which can materially affect
outcomes.
R It can be manipulated by choosing optimistic growth assumptions or long projection periods.
For these reasons, RiY is a rough indicator rather than a precise measure of total costs. It can be
useful for comparisons, but it should be interpreted with caution.
Retirement savings cost (RSC) disclosure
The RSC, effective from March 2019, is designed to assist potential and existing employers
and/or boards of trustees (referred to as “clients” in the ASISA standard) when comparing retirement
fund quotations.
The RSC differs from the EAC because the latter is aimed at individuals. The RSC is aimed at
employers and trustees, it is not a member level cost disclosure standard and is not designed for
individual fund members.
For products that combine life cover and investment plans, the RSC applies to the savings
element only.
The RSC Disclosure Standard does not apply to RA funds (including group RA funds),
preservation funds, beneficiary funds, compulsory annuities and other retail products provided that
they are disclosing the EAC.
The template must show four separate components into which defined charges are allocated over
four investment periods:
R Investment management charges
R Advice charges
R Administration charges
R Other charges including regulatory, compliance and governance costs
The RSC is calculated separately for each of the four components and then totalled to derive the
RSC for the umbrella fund as a whole. The value for each of the components, as well as the total
RSC, is expressed as a percentage of the investment amount. (See Table 3.4).
Table 3.4
Illustrative total retirement savings costs (RSC) as a percentage of assets
Charges 1 Year 1 to 3 Yrs 1 to 5 Yrs 1 to 10 Yrs
Investment management 1.20% 1.20% 1.20% 1.20%
Advice 0.50% 0.50% 0.50% 0.50%
Administration 0.95% 0.95% 0.95% 0.95%
Other 0.30% 0.30% 0.30% 0.00%
Total RSC 2.95% 2.95% 2.95% 2.65%

Fund and platform fees
As mentioned earlier, the fees covered thus far have been described from the point of view of a
single fund and relate to purchases made directly from the fund managers (either online or with the
help of a financial adviser).
In practise, many investors buy into unit trusts via LISPs or investment platforms (sometimes
referred to as unit trust supermarkets). Advantages of investing via a platform include access to a
much wider range of funds (compared to one management company) and ease of switching from

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