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Superannuation funds we compare at RateCity

Learn more about superannuation

Superannuation is one of the most important investments you will make in life. Strangely, though, many Australians don’t give super a lot of thought.

As the government continues to raise the age pension qualifying age, many of us will face the prospect of a self-funded retirement. The good news is the superannuation industry is responding by becoming increasingly competitive and you can often find a better deal.

We’re going to look at the importance of superannuation comparison, and how comparing super funds can help give you the edge in retirement.

What is superannuation?

Superannuation is designed as a strategy to accumulate enough funds in your working days to provide you with a steady income in retirement.

Your super balance grows through compulsory contributions from your employer, which you can supplement through voluntary contributions and salary sacrifice arrangements. Your funds will be pooled with those of other members, and will be managed by professional investors with a view to grow it steadily and provide solid returns, no matter how the market is performing.

In most cases you will not be able to access your superannuation funds until you’ve reached the point of retirement.

Why is it important to compare super funds?

Superannuation is by no means a one-size-fits-all prospect, and there are many advantages to testing the market and seeing if there is a product that better suits your financial needs.

Super funds can vary greatly in terms of fees and projected returns on investments. It’s also important to consider the add-ons you may qualify for when joining a super fund, including death, disability and income protection insurance.

Taking these factors into consideration when you compare your superannuation with other options is the best way to ensure you’re getting bang for your buck, or realise that perhaps it’s time to start looking elsewhere.

What should you look for when comparing superannuation?

When you’re comparing super funds, it’s important to have your retirement goals in mind. Superannuation comparison requires you taking a variety of factors into consideration, and little details can make a big difference in terms of your overall retirement outlook.

For instance, one fund might seem like a good option because if offers low administration fees. But it might not have the additional extras other funds possess, and it might offer a lower rate of return for members.

Here are some things to consider when comparing super funds:

  • Performance – While it shouldn’t necessarily be considered a reliable indicator of future performance, annualised returns from previous years at least gives you an idea as to how the super fund has tracked in the past against competitors. RateCity makes it simple to compare a range of super funds by performance.
  • Fees – Superannuation accounts incur a range of fees that could impact your overall balance. These could include administration fees, advice fees, indirect costs and insurance premiums. The amount and size of these fees varies from fund to fund, so it’s important you’re comfortable with the fees you’re paying. If you’re not, it’s time to test the market.
  • Additional extras – The superannuation industry is becoming increasingly competitive, with many funds looking to entice new members with added extras. These could include anything from advisory services to insurance, income protections and online access. When comparing super funds, it’s important to take the additional extras into account.


Are there different types of superannuation funds?

When it comes to super there are quite a lot of options, with multiple fund types available for people looking to shore up their retirement income.

When you’re comparing super funds, it’s important to be aware of these fund types, as well as their advantages and disadvantages. This makes it easier to choose a fund that represents the best option for you.

  • Industry funds – These funds are not-for-profit entities, set up purely for the benefit of members. While many industry funds are now open to all members of the public, they were once exclusively tied to a profession (such as doctors, lawyers, etc). Industry funds generally offer simple options, so you’re not charged for extras you don’t need.
  • Retail funds – These funds are run for the profit of shareholders. The companies that own these funds intend to retain a degree of profit, but they’re open to everyone and generally come with a lot of investment options.
  • Self-managed super funds (SMSFs) – After the global financial crisis (GFC), self-managed super funds took off in Australia, as many super owners saw their traditional funds dwindle. SMSFs are more difficult to manage, but they can offer certain advantages. With an SMSF, you control the investment directly, opening a greater number of investment options to increase your retirement savings.

Is it possible to change funds?

Many people in Australia miss an opportunity to maximise their retirement savings by failing to test the market and see what other super options are out there. Changing superannuation funds, or consolidating multiple funds into the one account, has the potential to maximise your savings, however there are some important factors to be aware of.

  • Termination fees – Many funds have termination fees that will be incurred if you look to change funds. Before making the decision to change funds, it’s important that you are aware of any such fees so you can make an informed decision.
  • Levels of insurance – Different superannuation funds offer different levels of insurance, and it’s important that the fund you’re moving to offers a level that is in line with your expectations. If not, you may find yourself under-insured or over-insured.
  • Can your employer pay – If you’re planning to jump ship to another fund, it’s important that your employer is made aware of this, and can make contributions to the new fund.


How much superannuation will I need to retire?

This is one of the big questions in life facing many Australians, and while the numbers have been crunched there really is no simple answer. When putting a number to a ballpark figure, you need to consider not only how long you will live after finishing work, but also what type of lifestyle you want, and any future medical costs on the horizon.

The Association of Superannuation Funds of Australia’s (ASFA) figures for March 2017 suggest the lump sum required to support a comfortable lifestyle is $640,000 for a couple and $545,000 for a single person, assuming some partial drawing of the age pension. But this figure may not be in line with what you want out of retirement. That’s why it’s so important to compare super funds and make sure the one you’re contributing to is best place to meet your retirement goals.

I’m ready to start comparing funds. What’s next?

If you feel like you could be getting a better deal elsewhere, it’s time to test the market. RateCity makes it easy to compare superannuation funds so you can be sure you’re in the best position to enjoy retirement on your terms, once your working days are over.

Frequently asked questions

What is a superannuation fund?

A superannuation fund is an institution that is legally allowed to hold and invest your superannuation. There are more than 200 different superannuation funds in Australia. They come in five different types:

  • Retail funds
  • Industry funds
  • Public sector funds
  • Corporate funds
  • Self-managed super funds

Retail funds are usually run by banks or investment companies.

Industry funds were originally designed for workers from a particular industry, but are now open to anyone.

Public sector funds were originally designed for people working for federal or state government departments. Most are still reserved for government employees.

Corporate funds are arranged by employers for their employees.

Self-managed super funds are private superannuation funds that allow people to directly invest their money.

How many superannuation funds are there?

There are more than 200 different superannuation funds.

What happens to my insurance cover if I change superannuation funds?

Some superannuation funds will allow you to transfer your insurance cover, without interruption, if you switch. However, others won’t. So it’s important you check before changing funds.

What is the difference between accumulation and defined benefit funds?

A majority of Australians are in accumulation funds. These funds grow according to the amount of money invested and the return on that money.

A minority of Australians are in defined benefit funds – many of which are now closed to new members. These funds give payouts according to specific rules, such as how long the worker has been with their employer and their final salary before they retired.

What is an SMSF?

An SMSF is a self-managed superannuation fund. SMSFs have to follow the same rules and restrictions as ordinary superannuation funds.

SMSFs allow Australians to directly invest their superannuation, rather than let ordinary funds manage their money for them.

SMSFs are regulated by the Australian Taxation Office (ATO). They can have up to four members. All members must be trustees (or directors if there is a corporate trustee).

Unlike with ordinary funds, SMSF members are responsible for meeting compliance obligations.

How do you set up superannuation?

Before you set up a superannuation account, you’ll need to check if you’re allowed to choose your own fund. Most Australians can, but this option doesn’t apply to some workers who are covered by industrial agreements or who are members of defined benefits funds.

Assuming you are able to choose your own fund, the next step should be research, because there are more than 200 different superannuation funds in Australia.

Once you’ve decided on your preferred superannuation fund, head to that provider’s website, where you should be able to fill in an online application or download the appropriate forms. You’ll need your tax file number (assuming you don’t want to be charged a higher tax rate), your contact details and your employer’s details (if you’re employed).

How long after divorce can you claim superannuation?

You or your partner could be forced to surrender part of your superannuation if you divorce, just like with other assets.

You can file a claim for division of property – including superannuation – as soon as you divorce. However, the claim has to be filed within one year of the divorce.

Your superannuation could be affected even if you’re in a de facto relationship – that is, living together as a couple without being officially married.

In that case, the claim has to be filed within two years of the date of separation.

Either way, the first thing to consider is whether you’re a member of a standard, APRA-regulated superannuation fund or if you’re a member of a self-managed superannuation fund (SMSF), because different rules apply.

Standard superannuation funds

If your relationship breaks down, your superannuation savings might be divided by court order or by agreement.

The rules of the superannuation fund will dictate whether this transfer happens immediately, or in the future when the person who has to make the transfer is allowed to access the rest of their superannuation (i.e. at or near retirement).

Click here for more information.

SMSFs

If your relationship breaks down, you must continue to observe the trust deed of your SMSF.

So if you and your partner are both members of the same SMSF, neither party is allowed to use the fund to inflict ‘punishment’ – such as by excluding the other party from the decision-making process or refusing their request to roll their money into another superannuation fund.

This no-punishment rule applies even if the two parties are involved in legal proceedings.

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Financial consequences

Superannuation funds often charge a fee for splitting accounts after a relationship breakdown.

Splitting superannuation can also impact the size of your total super balance and how your super is taxed.

Click here for more information.

How do you create a superannuation account?

Before you create a superannuation account, you’ll need to check if you’re allowed to choose your own fund. Most Australians can, but this option doesn’t apply to some workers who are covered by industrial agreements or who are members of defined benefits funds.

Assuming you are able to choose your own fund, the next step should be research, because there are more than 200 different superannuation funds in Australia.

Once you’ve decided on your preferred superannuation fund, head to that provider’s website, where you should be able to fill in an online application or download the appropriate forms. You’ll need your tax file number (assuming you don’t want to be charged a higher tax rate), your contact details and your employer’s details (if you’re employed).

How do I choose the right superannuation fund?

Different superannuation funds charge different fees, offer different insurances, offer different investment options and have different performance histories.

So you need to ask yourself these four questions when comparing superannuation funds:

  • How many fees would I have to pay and what would they cost?
  • What insurances are available and how much would they cost?
  • What investment options does it offer? How would they match my risk profile and financial needs?
  • How have these investment options performed historically?

How do I change my superannuation fund?

Changing superannuation funds is a common and straightforward process. You can do it through your MyGov account or by filling out a rollover form and sending it to your new fund. You’ll also have to provide proof of identity.

What fees do superannuation funds charge?

Superannuation funds can charge a range of fees, including:

  • Activity-based fees – for specific, irregular services, such as splitting an account after a divorce
  • Administration fees – to cover the cost of managing your account
  • Advice fees – for personal investment advice
  • Buy/sell spread fees – when you make contributions, switches and withdrawals
  • Exit fees – when you close your account
  • Investment fees – to cover the cost of managing your investments
  • Switching fees – when you choose a new investment option within the same fund

Can I choose a superannuation fund or does my employer choose one for me?

Most people can choose their own superannuation fund. However, you might not have this option if you are a member of certain defined benefit funds or covered by certain industrial agreements. If you don’t choose a superannuation fund, your employer will choose one for you.

How do you open a superannuation account?

Opening a superannuation account is simple. When you start a job, your employer will give you what’s called a ‘superannuation standard choice form’. Here’s what you need to complete the form:

  • The name of your preferred superannuation fund
  • The fund’s address
  • The fund’s Australian business number (ABN)
  • The fund’s superannuation product identification number (SPIN)
  • The fund’s phone number
  • A letter from the fund trustee confirming that the fund is a complying fund; or written evidence from the fund stating it will accept contributions from your new employer; or details about how your employer can make contributions to the fund

You might want to provide your tax file number as well – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

What are ethical investment superannuation funds?

Ethical investment funds limit themselves to making ‘ethical’ investments (which each fund defines according to its own principles). For example, ethical funds might avoid investing in companies or industries that are linked to human suffering or environmental damage.

How do I combine several superannuation accounts into one account?

The process used to consolidate several superannuation accounts into one is the same process used to change superannuation funds. This can be done through your MyGov account or by filling out a rollover form and sending it to your chosen fund.

How is superannuation regulated?

The Australian Prudential Regulation Authority (APRA) regulates ordinary superannuation accounts. Self-managed superannuation funds (SMSFs) are regulated by the Australian Taxation Office.

Can I take money out of my superannuation fund?

Superannuation is designed to provide Australians with money in their retirement. The government has strict rules around when people can take that money out of their fund because it wants to prevent people eroding their savings before they reach retirement.

As a general rule, you can only take money out of your superannuation fund when you reach:

  • Age 65
  • Your ‘preservation age’ and retire
  • Your preservation age and begin a ‘transition to retirement’ while still working

That said, you can take money out of your superannuation fund early based on one of these seven special conditions:

  • Compassionate grounds
  • Severe financial hardship
  • Temporary incapacity
  • Permanent incapacity
  • Superannuation inheritance
  • Superannuation balance under $200
  • Temporary resident departing Australia

What is superannuation?

Superannuation is money set aside for your retirement. This money is automatically paid into your superannuation fund by your employer.

How can I keep track of my superannuation?

Most funds will allow you to access your superannuation account online. Another option is to manage your superannuation through myGov, which is a government portal through which you can access a range of services, including Medicare, Centrelink, aged care and child support.

What should I know before getting an SMSF?

Four questions to ask yourself before taking out an SMSF include:

  1. Do I have enough superannuation to justify the higher set-up and running costs?
  2. Am I able to handle complicated compliance obligations?
  3. Am I willing to spend lots of time researching investment options?
  4. Do I have the skill to make big financial decisions?

It’s also worth remembering that ordinary superannuation funds usually offer discounted life insurance and disability insurance. These discounts would no longer be available if you decided to manage your own super.