Your employer will give you a standard choice form when you start a new job to select the super fund you would want your contributions to go into for your retirement planning. We have listed different types of super funds available and what you should look for before choosing the best super fund for your retirement planning.
Industry Funds:
These funds earlier catered to workers from those industries across multiple working sites only. They have recently opened this for anyone to join. The investment options are limited, though, and consist of pre-mixed investment options for people’s needs, including MYSuper accounts. There are profit-for-member funds. The profit that you get from these funds is put back or invested to benefit members’ needs,
Retail Funds:
These funds are run by financial institutions, such as banks, and are open to all investors. People who consult a financial advisor before investing are offered this fund via a platform that helps you access a wide range of investments. Note that retail funds are medium to high cost. Additionally, there are advice fees and platform fees involved as well. Many retail funds offer lower-cost MySuper alternatives nowadays. This is an accumulation fund, and the company that runs the funds retains some profit.
Public Sector Fund:
This was originally created for government employees only, but this not-for-profit fund is open for everyone now. The menu is limited with low fees options and MYSyper options too. This is an accumulation of funds for newer members.
Self-Managed Superannuation Funds (SMSFs):
If you want more flexibility and control over your funds, then SMSF may be the right move. You can also make it a family affair by involving your spouse or other members up to a maximum of six numbers. There is no minimum investment here. You may need to give setup costs and cost to cover administrative services if you use any.
MySuper Funds:
If you do not end up choosing a super fund for you, your employer will check for any existing super funds you have. Your super will be paid into a default MySuper fund if you have none.
MySuper fund is not a type of super fund, hence do not get confused. This default account option is offered to people who do not choose their one super fund when starting a job.
MySuper is simple, low cost, and easy to compare. Especially if you do not wish your savings to be spent on unwanted advice and services, you can choose one.
MySuper can be offered by industry, retail, and corporate funds in the pre-retirement phase.
What to Look for in a Super Fund:
When comparing super funds, there are various factors you need to weigh in before you take the risk of investment.
1. Performance:
If you opt for a fund, compare its investment performance over the last five years. You need to consider the impact of costs and fees, too.
Even a 1% difference in performance can add or subtract thousands of dollars from your super. However, you need to understand that how a super fund has performed over the years cannot be a reliable indicator of how it will perform in the coming years. But when you look into how the fund has done over a more extended period, it will indicate the funds’ average performance.
2. Low fees:
All super funds charge a fee that can be a few dollars, a percentage, or both. It is a no-brainer; the lower fee, the better. Fees will be deducted monthly and, after switching investments; hence, keep that into consideration.
3. Insurance:
Many super funds offer Total Permanent Disability (TPD), income protection, and basic death insurance as a default. This means you will get these covers for sure without even undergoing a health test. You will find several supers that allow you to modify or even cancel the default insurance cover, which offers greater flexibility, and you can opt for insurance that suits your situation.
When comparing the default insurance, look for the amount of cover, premium rates, and any exclusions that may affect you.
4. Investment Options:
The range of investment options that super funds let you choose also plays a significant role in your selection process. These options include:
- growth
- balanced
- conservative
- cash
- ethical
- MySuper
Learn more about super investment options.
Additional Services:
Super funds offer many additional benefits, like access to a relationship manager, member discounts, loyalty bonuses, free retirement planning seminars, and free online financial calculators. These special services may make one fund more attractive than the other. But do give weightage to the most critical elements first, and then you can compare these additional services to choose a super fund.
Hope this has helped you make the right decision about choosing the best super fund for you. For any more queries, you can always comment below and we will get back soon with answers.
You can also go through our FAQ section about super for retirement planning.