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5 things to consider before choosing your employer’s default super fund


Your super could be one of the most important investments you ever make, yet many of us let someone else decide where our money goes.

Sponsored by Aware Super. Winner of Money Magazine's 'Best Super Fund 2021'. We're an industry fund for all Australians. Our superannuation products can support you from your first job to retirement. Choose a super fund with tobacco free, climate friendly investment options that strives to do well for our members while also doing good for all. Learn more.

Everyone has the right to choose their own super fund in Australia but, for one reason or another, lots of us waive that right and end up sticking with our employer's default option.

But the default option isn't always best for you or your future. Not only could you find yourself with multiple funds - and multiple fees - as you change jobs, you could also be inadvertently investing in industries you don't support.

The good news is with just a little research, you might be able to find a fund which fits you far better, comes with lower fees, and returns more money too.

Not sure where to start? Don't worry. We've compiled five of the most important questions you should ask yourself before signing up with your employer's default super fund. And remember, if you're already with the default, you can still switch whenever you have a few minutes spare.

Does the fund align with your key values?

Some super funds aren't shy of a problematic investment. Australian funds have been known to invest in offshore detention centres, fossil fuels and even weapons manufacturers.

Thankfully, we're seeing more funds focus on ethical and sustainable investments that are good for the planet and our communities. Among them, Aware Super, which was the first major fund to be classified as tobacco free by Tobacco Free Investments and also seeks out investments in regional health services, affordable housing and green energy. Hooray!

Switching your super to an ethical fund might seem like a drop in the ocean but if everyone did it, hundreds of billions of dollars could be directed away from morally questionable industries.

How do the fees compare to others in the market?

In a Finder survey of over 8,500 Australians, 17% admitted they don't know whether they're getting good value for money from their super fund.

Understanding fees is an important step to figuring that out. There are lots of different fees associated with super, so keep an eye out for "total annual fee" and make sure it's inclusive of admin and investment fees.

From there, you can benchmark the fee against the industry average. Research from Rainmaker Information found that, in 2019-2020, personal super funds charged an average of 1.26% p.a. on the total super balance. That might not seem like a lot but on a $50,000 balance, that's $630 a year.

How is the long-term past performance?

It's all well and good to pick a fund that invests ethically, but your super could determine how you spend your retirement so you should also look at whether it performs over the long term.

Nobody wants a fund which won't deliver decent returns. While there's no way to truly know how your fund will perform in the future, looking backwards can offer some insight.

Make sure you look beyond the last year or so. Super funds are a long-term investment and if you're still a way off retirement, short-term fluctuations don't matter as much as the big picture. Just remember to compare like for like though - so only compare a balanced option with another balanced option, and always use the same time period.

What insurance cover is there?

Of all the Australians who have life insurance, more than 70% have it through their super. Funds typically offer three types: life cover, TPD insurance and income protection. The income protection portion may be standard or an optional extra, depending on your fund.

Keep in mind, cover varies between funds, as does the cost and the conditions under which you can claim.

How can I access my account?

Keeping an eye on your investments is a good habit to get into. So look for a fund that makes it easy for you to keep on top of what your super is doing in a way that's easy for you.

For example, some funds make it easy to monitor your super balance, see forecast returns and even keep an eye on those fees, all via an app.

Handy tools like this can also make it easier for users to boost their super with additional contributions when things are going well so it's worth checking if your fund has one.

Invest your super in a tobacco-free fund with Aware Super

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Unless indicated otherwise, the information in the table is based on data provided by SuperRatings Pty Limited ABN 95 100 192 283, Australian Financial Services Licence 311880.

*Past performance data and fee data is for the period ending Jan 2024

*Aware Super is recognised as tobacco-free Tobacco Free Portfolios. They exclude direct investments in companies that derive 5% or more of their revenue from the manufacture and/or production of cigarettes and other tobacco related products. Nice!

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