Compare super funds

*Past performance data is for the period ending December 2020.

Superannuation: What is it and how does it work?

Superannuation is likely to be your most-valuable financial asset when you retire. If you're not exactly sure what it is, don't worry, you're certainly not alone.

In fact, the terms 'superannuation' and 'what is superannuation' are searched in Google 60,000 times a month by Australians looking for clear, helpful information on getting their super sorted (perhaps that's how you got here yourself!). We've put together this guide to help you do just that; get your super sorted.

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AustralianSuper - Pre-mixed, Balanced option

AustralianSuper is an award-winning industry super fund and the largest super fund in Australia. The Balanced fund invests in a mix of different assets like shares, property and cash.

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What is superannuation?

Superannuation is the main way of saving for your retirement in Australia. we won't all be able to rely on the aged pension when we retire, so you need to make sure your super is enough.

The idea is by putting aside a small chunk of your earnings throughout your working life from the day you start your first job, you should have enough money to live on when you retire without needing government assistance. Without superannuation, you'll need to rely on your personal savings and investments when you retire, which may not be enough money to live on.

However, this isn't to say that everyone will retire with the same amount of super. A number of factors will impact how much super you have including the fund you're with, if you make extra contributions or not, how much money you earn and whether or not you take extended time out of the workforce.

How does superannuation work?

Employers are legally required to pay a certain percentage of your annual salary or earnings into your super fund each year. Currently it's set at 9.5% of your annual earnings. So for example if you earn $100,000 a year at your job your employer must contribute $9,500 to your chosen super fund. This money in your super fund is then invested into a range of different assets like shares, commodities, property and cash on your behalf by the super fund investment team.

Your super benefits from compounded investment returns over your working life to help it grow. When you're retired you can start withdrawing the money to fund your lifestyle and expenses when you're no longer earning an income from work.

There are a few situations where employees are not legally required to pay you any superannuation, including:

• If you earn less than $450 a month
• If you're under 18 and work less than 30 hours per week
• If you're not an Australian resident and complete the work outside of Australia

Types of super funds and the different investment options available

You have two main choices to make with your super; which fund to go with and what investment option to choose within that fund. Let's take a look at the types of funds available, and then the different investment options within them.

Types of super funds

The main types of super funds you can choose between are:

• Industry super funds:Industry super funds are not-for-profit funds that may focus on a particular industry but are open to all Australians. Popular examples include AustralianSuper and HostPlus. As they're not-for-profit, profits go back into the fund to benefit new and existing members.

• Retail super funds:Retail funds are for-profit funds owned by a bank, insurance provider or another type of large financial institution. Some examples are BT Super (owned by Westpac) and Colonial First State (owned by CommBank). Profits are split between members, shareholders and the financial advisers who sell the product to clients. Because they're owned by large financial institutions, retail funds often offer financial advice services to members.

• Member-owned funds. These are also not-for-profit funds with profits going back into the fund to benefit members, however they're not part of the official Industry Super Funds group. Some of these funds might be reserved for people in a particular state.

Once you've chosen the type of fund you want, you need to consider how you want your money invested by that fund.

Your superannuation investment options

There are two main options available for how your super is managed. The option you choose will depend on the level of day-to-day control you want to have over your super, and how hands on you wish to be.

Option 1: Pre-made investment portfolio

This option requires the least amount of work to manage. It's also the option where the majority of Australians have their super invested, and all the funds in our comparison table above are pre-made super investment portfolios.

Super funds offer a range of pre-made investment portfolios to members that are completely managed for you by their investment teams. These portfolios will invest in a mix of different assets including local and international shares, property, unlisted assets, fixed interest and cash. All you need to do is select which pre-made option to go with and your fund will do the rest.

The different super investment options are usually based around risk level, for example 'balanced', 'growth', 'high growth' or 'conservative'. Some funds also offer a pre-made ethical investment option too. Most funds even offer a default pre-made investment option (often called a MySuper option), so you don't even need to choose between the different options if you don't want to.

Option 2: Build-your-own investment portfolio

If you want to be more hands-on with your super (but don't want to go so far as opening a self managed super fund), this is a good option. Many super funds will allow you to build your own investment portfolio by selecting a range of single asset classes to invest in.

For example, instead of a pre-made portfolio which usually invests in 6-7 asset classes, you might just want to invest in shares and property. So, you'd select the individual asset classes for shares and property, and the investment manages would do the rest (that is, they'd still pick the actual stocks to buy, not you). Or, you could even opt for 100% of your super to be invested in one asset class if you wanted to with this option.

Why you should compare super funds

There are lots reasons to compare super funds. Basically, a better super fund will help you retire with more money. The more money you have in your super, the more comfortable retirement you'll be able to live.

You need to compare super funds as they all charge different fees, and they all invest your super in different ways. This is why some super funds have better long-term performance than others. Comparing super funds early on in your working life can save you thousands of dollars in fees and help you retire with a lot more money.

How to compare super funds

Consider the following when you're comparing super funds in the comparison table above:

• Look for low fees. The last column in the comparison table shows the total annual fees charged on a $50,000 super balance. To put it simply: the lower the fees the better. A general rule of thumb is to make sure you're not paying much more than 1% of the value of your super balance in fees per year (so for a $50,000 balance, funds with annual fees around $500 or less are relatively low). However, you should look at more than fees alone when comparing super funds.
• Look for high past performance figures. Unlike the fees, you want to look for a fund with high performance figures. When looking at past performance, make sure to look at the three and five year performance instead of only looking at the past one year's performance. This is because you want to look for a fund that has high performance over the medium to long term.
• An investment strategy you understand and agree with. Some funds offer life stage investment options, meaning they'll adjust your investments for you as you get older so you're not taking on too much risk. Similarly, a balanced fund will invest your money in a range of different things to ensure you're not 'putting all your eggs in one basket'. These aim to provide good returns while still protecting your super from big market crashes. Choose whichever strategy you think is right for you and your super.
• Consider ethical investing (if it's important to you). Some funds also offer a sustainable or ethical investment option. If this is something you're passionate about, consider choosing a fund that has an ethical investment option available.

Or for a little bit more help, take a look at our picks of the best super funds to see if one of these is right for you.

• How does Finder compare super funds?

  Each super comparison site takes a slightly different approach to superannuation comparison. Finder gives you the total annual fee on a $50,000 balance in a dollar figure to help make it easier to compare super funds; presenting the fees in a percentage figure is less transparent and doesn't always make it clear what you'll be paying. The fees and performance figures in Finder's superannuation comparison table are powered by leading superannuation research firm Chant West, ensuring the information is always accurate and up-to-date.

  Finder offers a detailed overview of each fund we compare completely free of charge, by clicking on the fund name in the comparison table. Finder does make money when you click through to some of the super funds listed (learn more about this here), however we've also showcased a number of leading and smaller funds that we have no commercial partnership with at all, to help you compare and find the right fund for you.

What should you look for in a super fund?

Noel Whittaker is a leading personal finance expert, author and journalist.

"You should be looking to join a super fund which will be your friend for life, so as well as high performance, look at the range of options available in every aspect.

The more transparent the fund, and the more simple the process, the better it is. Make sure your account will be online so you can look at your fund and change strategies any time you wish."

How can you help your super grow?

Nicole Pederson-McKinnon is a leading personal finance expert, author and journalist.

"Your super needs looking after like your plants but, better still, YOU don't even have to supply the water... your employer does that! What you need to supply is the perfect growth conditions, which is easy.

You need a fund with low fees and a decent long-term track record, and you need to choose the investment option that is right for your age and risk appetite: the younger you are, the more growth assets you can safely hold. And a bit of extra water / money when you can afford it sure wouldn't hurt!"

Almost ready to switch? Here's what to do before switching super funds.

Do you already have a super fund and you're looking to switch to a new fund? Here's a few things to do first.

• Check your super balance. When you're switching funds it's a great time to check your super balance and make sure all your recent super contributions have been made successfully. Take a look at your contributions over the last 12 months and make sure you've received all the payments you're entitled to from your employer (you should receive contributions from your employer at least four times a year).
• Check your insurance cover. Check the insurance cover you're currently receiving, and make sure the new fund you're switching to has a similar level of cover. Or, if you don't think you need any cover, you can opt out of insurance all together when switching to the new fund.
• Check for any lost super. Now's a perfect time to look for any lost super you might have. You could have some missing super if you've worked at several different jobs. You can look for any lost super via myGov online, and bring it over into your new fund.
• Let your employer know. Lastly, once you've you've switched super funds make sure you let your employer know right away so they can pay your next super guarantee payment to the correct fund.

Comparing super funds and switching is a quick, easy process (we promise!).

The table above can help you compare super funds and find one that's right for you. Once you've decided on a new fund, you'll be pleased to know that switching is quick and easy to do.

You can apply to join a new fund by completing the online application form. You'll need to fill in your personal details, select your investment option (you only have to do this if you want to, most Australians are in the default option) and the insurance cover you want. you'll also need to give the details of your employer and your old super fund, if you want to bring your super over into the new fund. This shouldn't take you any longer than 30 minutes to do.

Once you've submitted the form, the super fund will take it from there and do all the work for you. They'll set up your new fund and even contact your old fund to make sure all your super is transferred over as soon as possible. You don't even need to contact your old fund. If you need a bit more help, see our how to change super funds guide for a detailed step-by-step process.

Got it! What now?

Now that you understand how superannuation works and the different types of funds available, it's time to compare. Head to our comparison table at the top of this page to compare super funds, and click "Go to Site" if you'd like to open an account or learn more about the fund.

Frequently asked questions

• Superannuation companies: Some of the super funds we compare

  • AMP
  • ANZ Smart Choice Super
  • Australian Catholic Super
  • Australian Ethical
  • AustralianSuper
  • Bendigo Bank SmartStart Super
  • BUSSQ

  • BT Super for Life
  • CareSuper
  • Catholic Super
  • Cbus
  • Colonial First State
  • Commonwealth Bank Essential Super
  • Energy Super

  • CareSuper
  • Aware super
  • GROW Super
  • HESTA
  • HostPlus
  • ING Living Super
  • REST Super
  • MTAA

  • LGIASuper
  • MLC
  • QSuper
  • Sunsuper
  • Statewide
  • Spaceship
  • Virgin Money Super
  • UniSuper

• How can I help my super balance grow?

  You can grow your superannuation in a number of ways including employer contributions, concessional and non-concessional contributions, Governmnet contributions and via salary sacrifice.

  If you want to grow your super balance, read our guide on the six ways you can help grow your superannuation.

• How do government super contributions work?

  If you are eligible for either of these, they will happen automatically if you meet the requirements. It is unnecessary for you to apply directly for them.

  The two main ways the government might help grow your super are:

  • Co-contributions. The government may pay up to $500 per year into your super fund, equal to an amount that is up to 50% of your voluntary super contributions. This may be available if you earn less than $51,813 per year (after tax), and might be especially beneficial if you earn less than $36,813 per year. See the full co-contribution eligibility requirement, and how it works.

  • LISTO. This is the Low Income Superannuation Tax Offset. Eligible individuals who earn less than $37,000 per year may get up to $500 per year bonus superannuation contributions, generally meant to make sure you aren’t unfairly paying more tax on your super than your take-home pay. Check the LISTO eligibility requirement and see how it works here.

• How is super taxed?

  Superannuation is designed to help Australians save for retirement, so it’s taxed at a much lower rate than your regular income. Super is taxed at 15%, compared to your regular income which can be taxed as high as 45% depending on your income.

  You gain the tax benefit through concessional contributions, such as your employer paying you the superannuation guarantee or if you choose to contribute extra to your super out of your pre-taxed income. However, the amount you can add to your super each year to get the tax benefit is capped.

• How do I check my super balance?

  At the very least, super funds are required to send you account statements twice a year which will outline all the contributions made into your account, the fund’s performance and the fees you’ve paid.

  However, it’s important to look at your super more than twice a year. Most funds will have an online portal you can log into and see an up-to-date transaction history for your account. This is also where you can make any changes to your insurance cover or investment strategy, if you’re not satisfied with how it’s performing. Some funds also offer a dedicated mobile app so you can keep track of your super on the go, like you would a normal bank account.

  You can also see your current super balance by logging into your myGov account online.

• I’ve just started a new job, how do I set up my super?

  When you start a new job, you’ll need to supply your new employer with your Tax File Number, and they will provide you with a form to fill out your superannuation fund details. You can find all the necessary details, such as your fund account number and membership number on your latest account summary or via the online portal. If you’re not sure how to access this, give your fund a call and ask for some assistance getting the details you need.

  If you don’t yet have a super fund (for example if it’s your first job) you’ll have the opportunity to select one. If you don’t wish to select your own, employers are required to offer a default fund option called a MySuper fund. A MySuper fund is a basic super fund, with relatively standard fees and an investment strategy that is based on your age. Most major retail and industry funds offer a MySuper product.