Office Administration Expenses

Section 113(18) of the Act allows the Senior Master to pay from the Common Funds’ Guarantee and Reserve Account [G&R] the administration expenses of the Office. G&R is also intended to serve as a prudential safeguard for the investments of the Common Funds.

G&R is applied to meet all administration expenses including the salaries and on-costs of all staff employed in the Office. However, the interest which G&R produces is not sufficient to meet all of the operating costs. The bulk of the balance was made up by fixing rates of interest in respect of CF-2, pursuant to sections 113(14) and (15) of the Act, which are slightly less than the income actually produced by the investments of the Common Fund.

Administration Expense Ratio

The figure used by FIC to indicate the total cost of administering beneficiary’s funds is called the Administration Expense Ratio [AER]. The AER is defined as being:

total operating expenditure, excluding depreciation, for the financial year

total financial assets, including property, at the end of the financial year

The FIC AER for the last five financial years is:

Financial Year    AER
2013-2014          0.58%
2014-2015          0.59%
2015-2016          0.60%
2016-2017          0.58%
2017-2018          0.56%
2018-2019          0.54%
2019-2020         0.60%
2020-2021         0.59%
2021-2022          0.63% 

For a detailed explanation of FIC’s annual declared interest rates and operating costs you can download a copy of the current Interest Rates and Operational Costs  Information Sheet available in the Publications Section.