Find out what industry super funds are and how they compare to the rest.
An industry super fund is a fund that is designed to cater for members of a specific industry. For example, Cbus is an industry super fund that caters for members of the construction and building industry. However, deregulation and the evolution of the industry has meant most people can join most industry funds.
Compare industry super funds in Australia
Features of an industry super fund
While there are different types of industry super funds available in Australia, they are generally characterised by the following features:
- A wide range of investment options which cater to different people's needs.
- The majority of funds are accumulation funds, which means the balance will depend on the contributions you make.
- They generally have competitive fees, so if your industry super fund has high fees, it could be the time to switch.
- Some industry super funds offer MySuper accounts, which is the no-frills version of a super fund.
- They are considered not for profit, so the profits are put back into super fund balances rather than shareholders.
From 1 July 2005, changes to regulation meant that Aussies could choose the super fund they wanted their employees to send contributions to. In Australia, over 75% of employees stick with the default fund their employer chooses. In most cases, it's the industry super fund.
How do industry super funds work?
Under superannuation laws in Australia, your employer must make superannuation contributions in your name (also known as the Superannuation Guarantee). Your employer contributions are managed by your super fund. Generally, super funds pool members' contributions together and invest them into different assets, aiming to earn members a solid rate of return. At the moment, the compulsory contribution rate is 9.5% of your annual income. This includes casual loading, bonuses and any commission you may receive.
The industry super fund you’re with will manage your account and invest in a mix of investments.
The pros and cons of industry funds
- Cheap, no-frills options.
- Reasonable results, especially over the past 12 months.
- Limited or no advice.
- Limited investment choice.
Industry super funds can be beneficial for a large number of Australians who don’t have the time to manage their super. When people get closer to the retirement age, the lack of advice may motivate people to seek alternatives for their retirement savings.
Some of the most well known industry super funds include:
Industry vs. Retail super funds: Which is the right option for you?
Industry funds are run only to benefit members. They are often characterised by low fees and they don't pay commissions to financial advisers. There is an industry fund for every type of worker and many funds accept workers from any industry.
Retail funds are “for-profit” super funds mostly owned and operated by large financial service providers such as banks, insurance companies and investment houses. Retail funds seek to make a profit for themselves and their customers from their activity and may pay commissions to financial advisers. Read this guide to find out more about retail super funds.
Compare different types of super funds
If an industry super fund doesn't seem like the right option for you, compare different types of super funds below to find out whether they might suit your needs.
|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.|
Traps and pitfalls of industry super funds
A common trap with super funds comes when people swap funds. This is a common insurance trap. Check whether your existing insurance cover is obtainable with the new fund for similar premiums.
Don’t put up with poor administration. There are multiple stories about super fund administration gone completely wrong. So don’t put up with poor management. If you don’t like how the fund is managed, you might want to consider changing funds.