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By the time a person retires, their super is generally among their biggest assets. For most, it's the primary way to save for retirement, so choosing the right one can be extremely beneficial. In this guide we'll go over everything you need to consider when choosing a super fund, and you can also compare and choose a new fund via our comparison table.
The best super fund is the one that has all the benefits and features you want, and invests your money in a cost-effective way. It should also leave you feeling comfortable in the knowledge that you will receive a healthy sum in retirement. An SMSF might be best for some people, while others might want to use an industry or corporate super fund, nominate a retail fund or just stick with a default MySuper.
When comparing different super fund options alongside one another, you might want to consider:
Let’s take a look at these features in more detail.
Managed super funds (which are almost all funds other than SMSFs) have professionals who invest members’ money on their behalf. Historical performance, typically expressed as a percentage, is generally a measure of the return on investment previous members have earned. You’ll mostly want to look at the fund’s performance for the last five years, and can generally discard anything older than that.
However, historical performance isn’t everything. Most super funds will remind you that “past performance is not an indication of future performance” and some people may also want to sacrifice a bit of average performance for:
As with most fees generally, the lower the better. Consider:
Once you know how much you can expect to pay in fees, you can balance it next to the benefits to determine the advantages.
Most super funds offer insurance policies within your account, which are often slightly discounted. Generally, you can only find superannuation insurance to pay out in the event of:
To compare the insurance cover offered by two different super funds you may want to look at:
All three insurance types can be found through super funds, or outside of superannuation instead. However, they work a bit differently in each case. In very basic terms, you might think of super insurance as the cheap “no-brand” option, and insurance outside of super as the “deluxe brand name” option. Depending on your situation, you might want to have it all inside super, all of it outside super, or a combination of both.
Some supers might have additional benefits. For example, a corporate super fund might come with a contribution-matching deal, where your company pays extra into your super fund based on how much extra you voluntarily contribute. Or, an industry super fund might offer a range of industry-specific training for members, or a retail fund might include the chance to attend investment seminars.
You can find a different range of extra benefits depending on your situation, and it may be well worth considering them.
Super funds are designed to provide you with a tax effective means of saving towards your retirement years. They are also a way to ensure less retirees rely on the aged pension. Your super account is funded in a number of different ways and means, with the money being paid into the account being called a contribution or guarantee.
There are a number of different means through which money or contributions can be made to your super fund, and this includes:
There are a number of investment choices available when it comes to your super fund and you can choose how your fund is invested, with options such as property, shares, cash and fixed interest products such as bonds. One thing to bear in mind is that the reason why super funds are such a tax effective way to save towards your retirement is that super is taxed at rates much lower than the marginal tax rate, which is known as a concessional rate.
At most, employers usually pay an amount equal to the minimum 9% of your income to your super fund. These contributions made before taxes are referred to as the Superannuation Guarantee.
However, there are certain conditions under which contributions to the Superfund Guarantee are not necessary. If you are one of the following, the terms and conditions apply to you.
Those who can freely choose a super fund must not be involved in any agreement or award. If involved in an agreement, the contract does not need superannuation fund support. You are eligible to choose your superannuation if fund is being paid through notional agreement preserving state award.
There are various types of super funds which can be put under two different categories – profit for member funds and retail superannuation funds. Although there are still debates going on which category is better, understanding them is much better since their advantages and disadvantages are relative to the needs that you have. Compare the different types of super funds available using our table below.
Super fund type | Description |
---|---|
MySuper | Under Australian law, most employers are required to offer a MySuper-type fund as a default option for people who cannot (or don’t wish to) select their own fund. These are generally found as defaults, but you may also nominate a MySuper fund. It’s designed to be a safe option for most Australians, and is characterised by:
|
Retail funds | Widely-available commercial products, operated by financial institutions to turn a profit for themselves and their customers. These will typically be nominated, rather than selected as a default. Retail funds can vary widely, but are often characterised by:
|
Industry funds | These superannuation funds are generally designed for workers in a specific industry, and may be especially beneficial. Some industry funds are restricted to workers in a specific industry, while others are open to everyone. Industry super funds will often be available as a default, or might be nominated. Sometimes a super fund will be both an industry fund, as well as a MySuper fund. The key difference between these funds and retail funds is that they are owned by members not shareholders. They can vary widely, but are often characterised by:
|
Corporate funds | These are super funds a business offers to its employees. They might be exceptionally competitive, such as in the case of defined benefit funds. Naturally these will typically be found as default funds with various advantages and features. |
Self-managed super fund (SMSF) | The do-it-yourself super fund. You are responsible for investing your superannuation, as well as looking after the tax and legal obligations that go along with it. These are explained in more detail in this guide. |
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The amount of my superannuation has been decreasing. I didn’t notice before so I change my super fund and I found that it is decreasing as well. What should I do?
Hi Supawan,
Thank you for getting in touch with Finder.
I suggest that you seek financial advice on how your super could increase.
I hope this helps.
Please feel free to reach out to us if you have any other enquiries.
Thank you and have a wonderful day!
Cheers,
Jeni
Hello
My partner is self-employed, 50 years old and never have had a superannuation. Now I try to figure out what he will need.
He works in the computer industry and has not a huge income. Do you have any tipps where he can look for a super or what we have to think about to choose clever the super?
Thank you so much for your help!
Isabelle
Hi Isabelle,
Thanks for leaving a question on Finder.
Your partner who is self-employed can avail of his own choice of super fund since anyone who is in the workforce can choose any superannuation fund to undertake. You can check which form of contribution and the super fund will work for him. You can also consider speaking to a financial adviser for professional, personalized advice.
Cheers,
Joel