What is a retirement savings account?

Retirement savings accounts are becoming increasingly rare, as the majority of Australians now open a superannuation account when they join the workforce. However, there are still some retirement savings accounts in the market, so this guide will outline how they work and how they compare to super funds.

What is a retirement savings account?

A retirement savings account is a type of account provided by a bank, building society, credit union or life insurance company. It's run in a similar way to a regular savings accounts, however it's designed for your retirement savings and you can't access the money until you're retired.

Typically a retirement savings account awards a higher rate of interest in comparison to a regular savings account, as the purpose of the account is to help you save for retirement. Once you've met a condition of release or reach your preservation age, you can start drawing down on your fund.

Not many banks offer retirement savings accounts anymore, since superannuation funds became compulsory for employees.

How is a retirement savings account different to a super fund?

Although they aren't superannuation accounts, retirement savings accounts do fall within superannuation regulations and the tax advantages that come with that. However with a retirement savings account even your tax-free portion can earn interest.

A super standard balanced or growth super fund will usually offer far higher returns than a retirement savings account. This is because super funds invest a large portion of your balance into shares, which are high return but also much higher risk.

Unlike the money in your super fund which is subject to the market performance, the money in your retirement savings account is covered by the bank guarantee scheme. While these accounts do sit within the superannuation regulations, they don't follow a trust structure, making it different from a superannuation fund.

Which bank's offer retirement savings accounts?

According to APRA, these banks still offer retirement savings accounts (as of July 2020). Some aren't open to new customers.

• Commonwealth Bank of Australia (closed to new customers)
• Qudos Mutual
• Queensland Country Credit Union
• Police and Nurses Limited
• Police Financial Services Limited(closed to new customers)
• Defence Bank Limited
• Heritage Bank Limited
• Australian Military Bank Ltd

What to look for in a retirement savings account

As we said earlier, there are very few retirement savings accounts available today. If you do want to open one, look for the following:

Competitive interest rate

A higher rate of interest will help your retirement savings work harder. This is especially true if it's compounded daily. However even with a high interest rate on your retirement savings account, you'll likely earn much better returns with a superannuation fund that is actively investing your balance.

No fees

To ensure that every dollar you deposit helps you save for your retirement, you should look for a retirement savings account that changes no account keeping fees and no annual fees.

Account access

Your retirement savings account provider should let you view your account details online or via a mobile banking app. Some service providers offer online tools that allow users to search for their lost super, which they can then transfer to their new accounts.

What are the pros and cons of using a retirement savings account?

Tips for using a retirement savings account

• 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 any applicable fees and charges.

• Compare against super funds

Before opening a retirement savings account, conduct a thorough super funds comparison in the market to ensure you're finding the most suitable account for your needs. It's also important to compare these accounts against standard superannuation accounts. In particular, you can gauge how competitive the interest rate on your retirement savings account is when compared to the sorts of returns super funds typically deliver to their members. It is worth noting, however, that the return on funds invested into a standard super account is in no way guaranteed. Ultimately, it's up to you to decide the which strategy works best for you and your retirement plans.

Have you considered a super fund instead?

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Name	Last 1 year performance (p.a.)	Last 3 year performance (p.a.)	Last 5 year performance (p.a.)	Last 10 year performance (p.a.)	Fees on $50k balance (p.a.)
Australian Ethical Super Balanced Green CompanyEthical	Last 1 year performance (p.a.) +7.74%	Last 3 year performance (p.a.) +4.5%	Last 5 year performance (p.a.) +7.03%	Last 10 year performance (p.a.) +6.89%	Fees on $50k balance (p.a.) $603	Go to siteMore Info Compare
CareSuper Growth Industry fundHigher risk	Last 1 year performance (p.a.) +8.9%	Last 3 year performance (p.a.) +7.71%	Last 5 year performance (p.a.) +8.29%	Last 10 year performance (p.a.) +8.39%	Fees on $50k balance (p.a.) $553	Go to siteMore Info Compare
Aware Super High Growth Industry fundHigher risk	Last 1 year performance (p.a.) +10.17%	Last 3 year performance (p.a.) +7.44%	Last 5 year performance (p.a.) +8.85%	Last 10 year performance (p.a.) +8.69%	Fees on $50k balance (p.a.) $497	Go to siteMore Info Compare
UniSuper - Balanced Industry fund	Last 1 year performance (p.a.) +7.48%	Last 3 year performance (p.a.) +5.92%	Last 5 year performance (p.a.) +7.59%	Last 10 year performance (p.a.) +7.95%	Fees on $50k balance (p.a.) $351	Go to siteMore Info Compare
Spirit Super - Balanced (MySuper) Industry fund	Last 1 year performance (p.a.) +7.68%	Last 3 year performance (p.a.) +6.2%	Last 5 year performance (p.a.) +6.65%	Last 10 year performance (p.a.) +7.54%	Fees on $50k balance (p.a.) $452	Go to siteMore Info Compare
CareSuper Balanced Industry fund	Last 1 year performance (p.a.) +7.29%	Last 3 year performance (p.a.) +6.55%	Last 5 year performance (p.a.) +7.15%	Last 10 year performance (p.a.) +7.61%	Fees on $50k balance (p.a.) $553	Go to siteMore Info Compare
Australian Retirement Trust - Growth Industry fundHigher risk	Last 1 year performance (p.a.) +9.88%	Last 3 year performance (p.a.) +10.01%	Last 5 year performance (p.a.) +9.66%	Last 10 year performance (p.a.) +9.21%	Fees on $50k balance (p.a.) $542	Go to siteMore Info Compare
Spaceship - GrowthX Higher risk	Last 1 year performance (p.a.) +22.23%	Last 3 year performance (p.a.) +5.25%	Last 5 year performance (p.a.) +10.87%	Last 10 year performance (p.a.) N/A	Fees on $50k balance (p.a.) $503	Go to siteMore Info Compare
Australian Retirement Trust - International Shares Index (unhedged) Finder AwardIndustry fundIndexed investmentHigher risk	Last 1 year performance (p.a.) +20.99%	Last 3 year performance (p.a.) +11.75%	Last 5 year performance (p.a.) +12.02%	Last 10 year performance (p.a.) +11.42%	Fees on $50k balance (p.a.) $187	Go to siteMore Info Compare
AustralianSuper - Balanced Industry fund	Last 1 year performance (p.a.) +7.58%	Last 3 year performance (p.a.) +6.44%	Last 5 year performance (p.a.) +7.76%	Last 10 year performance (p.a.) +8.18%	Fees on $50k balance (p.a.) $382	Go to siteMore Info Compare
UniSuper - Conservative Balanced Industry fund	Last 1 year performance (p.a.) +4.85%	Last 3 year performance (p.a.) +4.78%	Last 5 year performance (p.a.) +4.92%	Last 10 year performance (p.a.) +5.89%	Fees on $50k balance (p.a.) $366	Go to siteMore Info Compare
AustralianSuper Conservative Balanced Finder AwardIndustry fund	Last 1 year performance (p.a.) +5.79%	Last 3 year performance (p.a.) +4.27%	Last 5 year performance (p.a.) +5.69%	Last 10 year performance (p.a.) +6.4%	Fees on $50k balance (p.a.) $367	Go to siteMore Info Compare
Australian Ethical Super Growth Green CompanyEthicalHigher risk	Last 1 year performance (p.a.) +8.89%	Last 3 year performance (p.a.) +6.09%	Last 5 year performance (p.a.) +7.88%	Last 10 year performance (p.a.) +7.64%	Fees on $50k balance (p.a.) $733	Go to siteMore Info Compare
Australian Retirement Trust - Australian Shares Industry fundHigher risk	Last 1 year performance (p.a.) +7.42%	Last 3 year performance (p.a.) +9.72%	Last 5 year performance (p.a.) +9.6%	Last 10 year performance (p.a.) +8.51%	Fees on $50k balance (p.a.) $347	Go to siteMore Info Compare
Spaceship Global Index Indexed investmentHigher risk	Last 1 year performance (p.a.) +18.66%	Last 3 year performance (p.a.) +10.37%	Last 5 year performance (p.a.) +10.41%	Last 10 year performance (p.a.) N/A		Go to siteMore Info Compare
UniSuper - Growth Industry fundHigher risk	Last 1 year performance (p.a.) +8.46%	Last 3 year performance (p.a.) +6.09%	Last 5 year performance (p.a.) +8.55%	Last 10 year performance (p.a.) +8.64%	Fees on $50k balance (p.a.) $426	Go to siteMore Info Compare

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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