Choosing a super fund can be a difficult task. Often, you enter the workforce with little knowledge of what funds offer, which is why many people go along with their employer’s preferred choice.
However, as you move between jobs, you have the tricky task of choosing between these two options:
- Stay with your original super fund
- Switch to a fund that better represents your new employment
So how do you know whether to stay or switch? And, more importantly, how do you determine which super fund is most suitable to your industry and needs?
What is a super fund?
A super fund is where your superannuation, or ‘super, is stored. This money is accumulated over your working life to act as savings for your retirement. Super is built up in two ways:
- Your employer makes contributions on your behalf
- You bump it up with lump sums of your own money
You generally join a super fund as soon as you enter the workforce – and your employer will have a recommended fund.
What is a self-managed super fund?
Australians may choose to put their superannuation into a self-managed super fund (or SMSF). The trustees are responsible for making super contributions to other members of the fund, and complying with tax and super laws.
Are there different types of super funds?
There are several hundred super funds in Australia, which can make the comparison task a little daunting. The good news is, there are only five main types, and most Australian workers can only choose from three of them.
Available to most Australians:
- Retail funds
- Industry funds
- Self-managed super funds
The other two types:
- Public sector funds (government schemes)
- Company (or corporate) funds
Public sector and company funds are generally only available to people who are part of the public sector or relevant company.
How do you compare funds? And what should you look for?
It never hurts to seek professional advice before comparing super funds. However, these are a few considerations to help you get started:
Rankings: Online superannuation ratings agencies allow you to compare how your existing fund ranks against others you may be considering joining. Options include Selecting Super, Chant West and Super Ratings.
Product disclosure statements (PDS): You can obtain a super fund’s PDS online or via email. The PDS outlines a summary of fees, charges, investment choices, insurance costs and how the fund communicates with you. These are all important things to consider.
Insurance covers: Many super funds offer discounts on insurances, plus basic cover without needing a medical. This is known as ‘group cover’, as it’s a package deal for all members. This can vary from fund to fund, and may not be available to you if you join a super fund as an individual rather than via your employer.
How do you change super funds?
Switching funds is easier than it once was. You can simply fill out a super rollover form, available through the Australian Taxation Office (ATO).