Superannuation is one aspect of our finances that (for most of us) gets less attention than it should. Probably because it seems more complex than it actually is.
Being a good money manager requires you to periodically assess your finances and evaluate whether your current financial position is benefitting you in the short and long term.
Your superannuation account shouldn’t escape the same scrutiny that you would place on your credit card or home loan.
With the variety of superannuation funds out there, it’s important that you choose your superannuation fund wisely. Because you can!
How to find the best super fund for you
To determine the best superannuation fund for you, a good starting place is your current fund. When was the last time you examined your quarterly or annual statement?
When looking at your super statement, or looking for a superannuation fund to invest with, there are some easy items to consider which can help with your decision:
- Fees: What are the administration and fund management fees?
- Investment options: Does the fund offer Australian or international shares, cash, bonds, property or a mix of all?
- Track record: How long has the fund existed and what returns has it recorded for members?
- Insurance: Can you take out life or income protection insurance? Is it more competitive than your current provider?
- Other services: Does the fund offer additional services such as financial planning and advice?
These factors can help to narrow down your choices when you're looking for the best super fund based on your needs. You can go even further and pick a fund based on what type of fund it is.
What type of superannuation funds are there?
The following list is a snapshot of the type of super funds that exist in Australia (of course, this list is subject to change):
- Retail funds are usually owned and operated by banks or investment companies. Anyone can join a retail fund.
- Public sector funds were created for federal, state, and local government employees. Some public-sector funds accept members who are not public servants.
- Industry funds generally represent employees from specific industry sectors such as manufacturing or hospitality. Many industry funds accept members from outside their industry.
- Corporate funds are privately owned and operated by an employer specifically for its employees. You need to be an employee to be a member of this type of fund.
- MySuper is a default superannuation account where employers can make contributions on behalf of an employee. This is a no-frills account that does not offer defined benefits.
- Self-managed funds are controlled by you. Also referred to as SMSF accounts, self-managed funds require a thorough understanding of superannuation and investing to manage.
When choosing the best super fund for you, you can decide based on your occupation or industry, or perhaps you want a fund that’s in line with your values.
Many superannuation funds represent specific interest groups and advocate for certain principles. For example, you can choose a fund that invests in renewable energy or one that donates a percentage of profits to charity.
How do I change superannuation funds?
Now that you’ve considered whether you want, say, a retail fund run by one of the big banks or a not-for-profit industry fund that gives profits back to members, what next in your search for the best superfund for you?
Most superannuation funds let you open an account online or over the phone. This step is relatively straight-forward, although you will need your tax file number on hand for this process.
Once you’re up and running, you may need to roll over any existing superannuation accounts to the new fund. There a couple of ways you can do this:
- Find out if your new super fund will do this for you (in most cases they will)
- Roll over your existing account/s yourself via the MyGov portal (you will need to have the Australian Taxation Office linked to your profile)
Voila! All done.
What is the superannuation guarantee?
The superannuation guarantee is the term given to compulsory superannuation contributions made by employers to complying superannuation funds.
From 1 July 2014, the federal government stipulated that an employer must contribute 9.5 per cent (as the minimum) of an employee’s wage or salary to their superannuation, although this is scheduled to gradually rise to 12 per cent by 2025.
Super guarantee percentage
|Period||General super guarantee (%)|
|1 July 2002 - 30 June 2013||9.00|
|1 July 2013 - 30 June 2014||9.25|
|1 July 2014 - 30 June 2015||9.50|
|1 July 2015 - 30 June 2016||9.50|
|1 July 2016 - 30 June 2017||9.50|
|1 July 2017 - 30 June 2018||9.50|
|1 July 2018 - 30 June 2019||9.50|
|1 July 2019 - 30 June 2020||9.50|
|1 July 2020 - 30 June 2021||9.50|
|1 July 2021 - 30 June 2022||10.00|
|1 July 2022 - 30 June 2023||10.50|
|1 July 2023 - 30 June 2024||11.00|
|1 July 2024 - 30 June 2025||11.50|
|1 July 2025 - 30 June 2026||12.00|
|1 July 2026 - 30 June 2027||12.00|
|1 July 2027 - 30 June 2028 and onwards||12.00|
How much superannuation do I need to retire?
How much super you need to retire will depend on what retirement lifestyle you want. If luxury travel is part of your retirement plan, you might need to make extra contributions yourself to achieve this goal.
To help you estimate your retirement’s budget, you can refer to organisations such as the Association of Superannuation Funds of Australia to help with your calculations.
Budgets for various households and living standards (March quarter 2018, national)
|65 year old singles||65 year old couples||85 year old singles||85 year old couples|
Source: Association of Superannuation Funds of Australia - assumes that the retirees own their own home outright and are relatively healthy
To determine how much money you’ll have available in your super fund by the time you retire, you can use a government calculator to estimate how much you’ll receive from your employer. If this isn’t enough to afford the retirement lifestyle you’d like, you may want to consider making additional super contributions.