Industry vs retail super funds: what’s the difference?

In Australia, there are over 13.7 million accounts in industry super funds as of December 2023, and over 6.2 million in retail super funds, according to data published by The Association of Superannuation Funds of Australia (ASFA). 

Are industry super funds better than retail? Before you choose a super fund, you’ll want to know how industry super funds and retail funds compare and decide which type of fund suits your goals. 

Some of the differences between industry and retail super funds include: 

1. Returns

The Australian Government Productivity Commission’s analysis found that industry funds (not for profit funds) provided better returns to members compared to retail funds in the 13 years up to 2017. However, past performance is not necessarily an indicator of future growth, and you should evaluate the particular fund you’re considering in greater detail when you’re making a choice. 

2. How profits are used

A major difference between industry and retail super funds is how they use their profits.

Retail super funds generate profits for their corporate owners. These profits are typically distributed to shareholders.

Industry super funds are ‘not for profit’ or ‘profit to member’ organisations. Profits generated are returned to members and not distributed to any other stakeholders.

3. Costs

All super funds charge fees, which can affect your retirement outcomes. Generally, industry super funds charge lower fees than retail super funds, because they don't operate with a profit motive. Industry super funds also don't pay commissions to financial advisors, which can help them keep member costs under control. 

Both industry and retail super funds offer MySuper Accounts that offer basic features and charge lower fees.

4. Membership criteria

You can invest in any retail super fund of your choice, and many industry super funds are open to everyone. However, some industry super funds are only open to people employed in that industry.

5. Investment options 

Retail super funds may offer a greater variety of investment options and flexibility than comparable industry funds. Choosing investment options may allow you to better customise and diversify your portfolio, and set an investment strategy that better suits your stage of life.

Apart from retail and industry super funds, there are other types of superannuation funds available. These include: 

• Public sector superannuation funds that are generally exclusive to federal and state government employees; 
• Corporate funds that are often exclusive to the employees of the corporation offering the fund, and; 
• Self-managed superannuation funds that allow you to manage your own super finances instead of a professional fund manager.

Each of these options has its own pros and cons, and it’s worth learning about the different options to pick one that fits your lifestyle and financial situation.

If you find your super fund isn’t right for you or you want to change to another type of fund, it’s possible to switch to another super fund. However, you should know what to compare in a super fund. Some of the things you can look for when comparing super funds include the fees, insurance options, investments and past performance.

Once you decide on the new fund, you could contact the super fund provider for the steps involved or use the government’s MyGov website to transfer your super. It’s also important that you remember to contact your employer and provide them with the necessary details when you change your super fund provider.