Choosing your superannuation fund is an important decision to get right, as the performance of your fund can affect how much money you have when you retire.
But how do you compare one fund with another, especially when so many institutions seem to be offering similar products? Here’s how to choose a super fund that meets your needs.
Can I choose my own super fund?
Thanks to reforms made by the government in 2005, most workers in Australia have the freedom to choose their own superannuation fund, whether that’s one run by the Commonwealth Bank or another institution.
When you start a new job, your employer will give you a standard choice form that allows you to request which fund you would like your super contributions to be placed in. You can also change your super fund at any time by filling out an ATO rollover form and sending it to your new fund.
If you don’t select your own super fund, your employer will choose a default fund for you, so it’s worth taking the time to choose a fund you’re happy with.
Here are some questions to ask when comparing Commonwealth Bank super with other funds on the market.
What investment options does the fund offer?
Super funds offer different investment options with varying levels of risk and return. Although each fund has its own mix, these options can generally be grouped into three categories:
- Growth – most of your money is invested in growth assets (for example, shares or property) to deliver long-term returns, but with greater risk of loss
- Conservative – most of your money is invested in income assets that offer a steady but modest return, such as fixed interest or cash.
- Balanced – this strategy strikes a balance between high-risk growth assets and low-risk income assets.
Before signing up with a super fund, find out if they have an investment strategy that suits your needs.
If you have 20 years of work ahead of you, a balanced strategy may help you grow your nest egg, while a conservative option may be suitable if you’re close to retirement and want to keep your money secure.
Does the fund give a good long-term return on investment?
How a super fund performs can make a big difference to your nest egg, even if it’s only a matter of a few percentage points. When you are researching super funds on the market, rather than simply looking at last year’s investment return, it can be a good idea compare each fund’s performance over the last five years using the RateCity website. This will give you an indication of how each fund performs over time.
Also, make sure you are comparing apples with apples. For a fair comparison, compare, say, the growth option of one super fund with the growth option of another, not with the balanced option.
What insurance products does the fund offer?
There can be advantages to buying insurance with your super fund. They tend to offer cheaper policies compared to stand-alone insurance products, and the premiums you pay are tax-effective, as they are deducted from your pre-tax income.
Many funds offer a range of insurance products for its members, such as life insurance, total and permanent disability cover and income protection cover. When selecting a super fund, check what types of insurance they offer, the premiums they charge (some are more expensive than others) and what limitations they have for each policy.
What fees does the fund charge?
Fees can eat into your superannuation over time, so don’t forget to check what fees a fund charges by reading the product disclosure information. Some common fees charged by super funds include:
- exit fees for closing the fund
- administration fees
- financial advice fees
- fees for managing your investment
- contribution fees
- switching fees when you swap investment options.
Are there any other services the fund offers that are of interest to me?
Like any other financial product, super funds often come with features that make it easier for you to keep track of your super.
This may include things such as an online account, financial planning services, financial education products, assistance with retirement planning and financial calculators.
Find out if the fund you are researching has any features that appeal to you.
Superannuation and CBA
Investing your superannuation with Commonwealth Bank may help you better save towards your retirement.
To open a Commonwealth Bank super account, you can speak to someone over the phone, visit in person at a local branch, or simply apply online. If your money is spread across multiple accounts and you’re not sure how to locate it, you can also use Commonwealth Bank’s online services or app to find your lost super.
Commonwealth Bank will offer support if you need help setting up your super account.