Office administration expenses

Section 113(18) of the Supreme Court Act 1986 (Vic) (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 income 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 income 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 client funds is called the administration expense ratio (AER). The AER is defined using this equation:

AER=total operating expenditure, excluding depreciation, for the financial yeartotal financial assets, including property, at the end of the financial year\textrm{AER} = \frac{\textrm{total operating expenditure, excluding depreciation, for the financial year}}{\textrm{total financial assets, including property, at the end of the financial year}}

The FIC AER for the last five financial years is as follows.

Financial yearAER
2020–210.59%
2021–220.62%
2022–230.64%
2023–240.64%
2024–250.65%

For more information, you can download a copy of the current Crediting Rates and Operational Costs Information Sheet from our Investment information page.