It’s never too early to start saving for retirement, but do you have enough information about your options?
A retirement savings account (RSA) is an account that you can transfer your super fund into once you've met a condition of release.
It is similar to a savings account, but these accounts are in line with superannuation regulations and it's tax advantages. Even your tax-free portion can earn interest, helping you through retirement.
Your retirement savings accounts options below
More finder.com.au retirement savings accounts
Compare the maximum interest rate against it's conditions in the table below.
| Product name | Maximum interest rate | Conditions |
|---|---|---|
| Defence Bank RSA | 1.75% | Balance > $10,000 |
| AMP Retirement Savings Account | N/A | No longer available for new applications |
| Heritage Bank Secure Super Account | 2.00% | Whole balance |
| bcu Retirement Saving Account | 2.11% | Balance > $10,000 |
How does a retirement savings account work?
Typically a retirement savings account awards a higher rate of interest in comparison to a regular savings account. Once you've met a condition of release, you can organise for your super fund balance to be transferred to a retirement savings account, where you can start drawing down on your fund.
A good RSA should ease your transition into retirement and it should provide you with a regular income when you retire.
How do I compare retirement savings accounts?
Comparing retirement savings accounts requires that you pay attention to the following:
Long-term investment performance
Start by comparing the long-term performance of similar superannuation investments. Know that no assets class can consistently outperform the market over time, so it’s best that you look at diversifying your investments. If you’re not sure about picking the right options, you can leave this aspect to your service provider.
Little to no fees
Many Australians switch their superannuation accounts because they can save in the form of fees. Typically, not-for-profit funds such a public sector, corporate and industry funds tend to charge lower fees when compared to retail funds. While many retail funds have started charging lower fees than before, you may still have to pay a contribution fee and a periodical account management fees. Wholesale profit generating funds can also offer competitive fee structures, but you might be able to join such a fund only through your employer.
Insurance cover
This aspect requires particular attention because if you’re seeking a super fund as an individual you could have to pay a tidy sum to get insurance cover. If you join through your employer you can expect a noticeably better deal on the insurance front. If you’re planning to make the switch, make sure you get suitable cover through your new account before abandoning the previous cover.
Account access
Given the widespread use of the Internet, your RSA provider should let you view your account details online. Some service providers offer online tools that allow users to search for their lost super, which they can then transfer to their new accounts.
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What are the pros and cons of using a retirement savings account?
The pros
- Good way to manage your finances during retirement. A retirement savings accounts is a good way to start saving for retirement, given that you stand to earn higher returns when compared to conventional bank accounts. You can also choose how much you get paid and how often through flexible pension payment alternatives.
- Multiple investment options. Some retirement savings accounts come with capital assurances that guarantee no negative returns.You can also choose between low-cost basic options and leading cash and balanced funds based on your requirements and ability to withstand risk.
- Typically no joining fees are charged. You can find an RSA that does not charge any joining fees, ongoing account keeping fees, investment fees, administration fees and commissions.
The cons
- There are usually ongoing fees. Depending on the service provider you choose, you may have to pay operating fees, investment management fees and advice fees. The price you pay for getting insurance cover can also work as a deal breaker.
A list of institutions offering RSAs (and approved by APRA):
| Name of financial institution | Date approved |
|---|---|
| Commonwealth Bank of Australia | 25-06-1997 |
| Bananacoast Community Credit Union Limited | 26-03-1999 |
| QANTAS Staff Credit Union Limited | 29-07-1999 |
| Hunter United Employees' Credit Union Ltd | 29-07-1999 |
| Queensland Country Credit Union | 16-11-1999 |
| Police Financial Services Limited | 30-06-2000 |
| Defence Bank Limited | 6-07-2009 |
| Heritage Bank Limited | 7-10-2011 |
| Australian Defence Credit Union Limited | 16-12-2013 |
Tips for using a RSA
Read the terms and conditions
Make sure you go through the product disclosure statement (PDS) before signing up for any retirement savings account. The summary page of this document should give you a clear indication of all applicable fees and charges, including how much different insurance options would cost. This document lists investment options and also informs you how the fund provider will communicate with you.
Have the correct documentation
If you end up changing your super fund you have to complete and submit a Standard Choice Form (SCF) to your employer. It is then your employer’s responsibility to take suitable action within two months. You should also complete a member application form and arrange for transfer of existing benefits.
From an investment point of view, know that picking suitable investment plays a crucial role. For example, investing in shares at a time when the share market is going through turbulent times is not a good idea.
Did you have these questions?
Do I have to pay any fees to make the switch?
This depends on the service provider you chose, and some may require that you pay a switch fee.
Can I apply for a retirement savings account online, and if so, how long does the process take?
Yes, you can submit an online application. If you have the required information close by, you can complete the application in minutes.
I’ve just changed my job. Can I continue using my existing superannuation account?
Yes, you can. You simply have to notify your new employer of your choice.
Apart from a superannuation fund, are there any other options to create a private pension?
Hi John,
Thank you for your inquiry.
Regarding that matter, you may want to check directly to Australian Government Department of Human Services for your options.
I hope this information has helped.
Cheers,
Harold
My only super account was closed due to bad mail redirection and the balance was sent to the ato. I contacted the ato and they said I should open a retirement savings account which has less fees. I don’t know much about super and rsa’s as I have spent most of my life unable to work much. What should I do to get this small amount 2000 as I now have a terminal disease. and need this money. The ato says they wont release it until I am 65 but I am not likely to make it to that age
Hi Juliet,
Sorry to hear about your situation.
If your account was closed, it may have been transferred to another super fund that holds unclaimed super or transferred to the ATO. You can log into myGov via the ATO website to find the super and organise to transfer it to your account. Otherwise, our guide on finding unclaimed super may also be of help.
Regarding a retirement savings account, it works like a savings account but generally with a higher rate of interest. You can transfer your super into this account.
Hope this has helped.
Clarizza