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Learn more about superannuation

What is superannuation in Australia?

Superannuation in Australia is the money you save for your retirement. To help Australians enjoy greater financial security in their golden years, employers are required to pay a percentage of each employee’s salary into a super fund, where the money can be saved until retirement.

When choosing a super fund to securely save and grow your retirement wealth, one way to start comparing superannuation companies is by looking at the top ten best performing super funds in terms of their past returns. While the past performance of a super fund is not a guarantee of its future performance, it can give you a better idea of what you may be able to expect from different super companies.

The largest super funds may not always experience the best investment performance. As well as looking at a list of the top performing super funds in terms of their past 5-year returns, it’s important to compare the fees that superannuation companies charge, the features they offer, and other pros and cons to make sure you choose the best super fund to suit your finances.

Which is the best super fund?

The best choice of superannuation fund for you will depend greatly on your personal circumstances and financial situation, as well as what you want out of your retirement.

Looking at the top ten super funds in terms of recent fund performance is one way you could start your super fund comparison, but it’s often worth considering some other factors before making a choice:

  • Level of investment risk – Higher risk growth funds that invest in high growth assets could potentially lead to higher investment returns that can help grow your wealth, but a more conservative investment strategy could help keep your retirement wealth more secure. Other investment options to consider include balanced funds and super funds that invest in specific asset classes. 
  • Features – Does the fund come with extra financial benefits that you’re likely to use (e.g. insurance, financial planning, discounted home loans etc.)?
  • Fees – How much will the super fund cost you each year, and will these fees start eating into your retirement savings? Lower fees may allow you to retire with more money, though the super fund with the lowest fees may not always be the best super fund for your financial situation.
  • Type of fund – Retail funds, industry funds, self-managed funds and other types of super funds each have their own pros and cons. If you don't select a specific super fund when you start working for an employer, you may default to a MySuper option. These funds may be relatively simple to manage, with relatively balanced investment options that could offer balanced growth, but may only provide fairly basic features and benefits.

Can you change super funds?

It is possible to change your super fund if you’re not happy with your current fund (such as if your fund appears on a list of the worst performing super funds), or if you want to take advantage of a feature or offer from another superannuation company. The process of switching super funds is similar to the process of consolidating multiple super funds into one single account.

Before you switch or consolidate your super funds, make sure you’re confident that the fund you’ve selected will suit your finances and your household’s needs, and check whether your existing super fund or funds have exit fees or similar costs you’ll need to pay when switching.

Also, while you can switch super funds at any time, you cannot make your employer change your super fund more than once a year.

Once you’re confident you want to change super funds, and have found a new fund that you’re interested in, switching is often fairly straightforward. Many superannuation companies have a convenient online application process where you enter some details about yourself and your finances, and the lender takes care of the rest of the rollover process. Alternatively, you can apply via a paper rollover form from the ATO, or contact the super fund over the phone. Some funds also have branch offices you can visit if you’d prefer to go through the process in person. 

If you have multiple super accounts that you’d like to consolidate into a single fund, you can manage this either by logging into MyGov or filling out a rollover form from the ATO, including details of the funds you’re leaving and the details of the superannuation fund you’re moving your money to.

When can you access your super?

Superannuation is intended to provide Australians with a secure nest egg for their retirement. Because of this, there are rules in place to limit when and how you can access the money in your super fund.

Superannuation is most often accessed once you reach a certain age (your “preservation age”) and retire from the workforce. You may choose to:

  • withdraw your super balance all at once as a single lump sum;
  • make smaller withdrawals on a regular basis as an income stream, or;
  • split the difference, withdrawing part of your balance as a lump sum and keeping the rest available as an income stream.

It is possible to withdraw part of your superannuation early, but usually only in emergency circumstances, such as if you’re facing terminal illness or permanent incapacitation, or on compassionate grounds.

Super for low income earners

If you earn less than $37,000 per annum in taxable income, you may be eligible to receive a government tax rebate on your super contributions.

The Low Income Tax Offset (LISTO) may allow you to receive up to a maximum of $500 to your super fund each financial year, down a minimum of $10.

You don’t need to do anything special to receive the LISTO rebate – just complete your tax return as normal, and the ATO will determine whether you fulfil the criteria and deposit the rebate directly into your super account.

Depending on your income and current super balance, if you make personal contributions to your super out of your post-tax income, you may also be eligible to claim a government co-contribution of up to $500 towards your super fund.

How to find the best performing super funds

One simple way to find some of Australia’s best performing super funds is to use a comparison website like RateCity. Using our tables, you can view super funds side by side to work out which of these top performers may best suit your financial situation. Selecting a super fund that suits your financial needs could potentially make a big difference to your long-term retirement plans.

A super fund’s past 5-year return can give you an idea of the past performance of its investments. The higher the number, the better the performance from the fund’s investments in the recent five-year period. Of course, this does not guarantee that you’ll enjoy similar performance in the future if you choose a particular super fund.

As well as checking the investment performance of different super funds, it’s also important to compare their administration fees and any other annual fees they charge, as well as any other features and benefits they offer. Ratings and awards from SuperRatings can also give you an idea of the achievements that some super funds have earned, so you can see whether these options may be right for your financial situation.

If you're not sure which super fund may be right for you, consider contacting a financial counsellor for more financial advice. Be sure to read the fine print and any product disclosure statement (PDS) before committing to any financial product.

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 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.

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 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.

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).

What superannuation details do I give to my employer?

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 should also provide your tax file number – while it’s not a legal obligation, it will ensure your contributions will be taxed at the (lower) superannuation rate.

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.

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

What is MySuper?

MySuper accounts are basic, low-fee accounts. If you don’t nominate a superannuation fund, your employer must choose one for you that offers a MySuper account.

MySuper accounts offer two investment options:

  1. Single diversified investment strategy

Your fund assigns you a risk strategy and investment profile, which remain unchanged throughout your working life.

  1. Lifecycle investment strategy

Your fund assigns you an investment strategy based on your age, and then changes it as you get older. Younger workers are given strategies that emphasise growth assets

Is superannuation included in taxable income?

Superannuation is not included when calculating your income tax. So if you have a salary of $50,000, your assessable income would be $50,000, not $50,000 plus superannuation.

That said, superannuation itself is taxed. It is generally taxed at 15 per cent, although if you earn less than $37,000, you will be reimbursed up to $500 of the tax you paid.

What are reportable superannuation contributions?

For employees, there are two types of reportable superannuation contributions:

  • Reportable employer super contributions your employer makes for you
  • Personal deductible contributions you make for yourself

How much money do you get on the age pension?

Pension payments can be reduced due to the income test and asset test (see ‘What is the age pension’s income test?’ and ‘What is the age pension’s assets test?’).

Here are the maximum fortnightly payments:

Category

Single

Couple each

Couple combined

Couple apart due to ill health

Maximum basic rate

$808.30

$609.30

$1,218.60

$808.30

Maximum pension supplement

$65.90

$49.70

$99.40

$65.90

Energy supplement

$14.10

$10.60

$21.20

$14.10

TOTAL

$888.30

$669.60

$1,339.20

$888.30

Is superannuation taxed?

Superannuation is taxed. It is generally taxed at 15 per cent. However, if you earn less than $37,000, you will be automatically reimbursed up to $500 of the tax you paid. Also, if your income plus concessional superannuation contributions exceed $250,000, you will also be charged Division 293 tax. This is an extra 15 per cent tax on your concessional contributions or the amount above $250,000 – whichever is lesser.

How do you calculate superannuation?

Superannuation is calculated at the rate of 9.5 per cent of your gross salary and wages. So if you had a salary of $50,000, your superannuation would be 9.5 per cent of that, or $4,750. This would be paid on top of your salary.

The ‘superannuation guarantee’, as it is known, has been at 9.5 per cent since the 2014-15 financial year. It is scheduled to rise to 10.0 per cent in 2021-22, 10.5 per cent in 2022-23, 11.0 per cent in 2023-24, 11.5 per cent in 2024-25 and 12.0 per cent in 2025-26.

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.

When can I access my superannuation?

You can withdraw your superannuation when you meet the ‘conditions of release’. The conditions of release say you can claim your super when you reach:

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

The preservation age – which is different to the pension age – is based on date of birth. Here are the six different categories:

Date of birth Preservation age
Before 1 July 1960 55
1 July 1960 – 30 June 1961 56
1 July 1961 – 30 June 1962 57
1 July 1962 – 30 June 1963 58
1 July 1963 – 30 June 1964 59
From 1 July 1964 60

A transition to retirement allows you to continue working while accessing up to 10 per cent of the money in your superannuation account at the start of each financial year.

There are also seven special circumstances under which you can claim your superannuation:

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

 

How do you find superannuation?

Lost superannuation refers to savings in an account that you’ve forgotten about. This can happen if you’ve opened several different accounts over the years while moving from job to job.

You can use your MyGov account to see details of all your superannuation accounts, including any you might have forgotten. Alternatively, you can fill in a ‘Searching for lost super’ form and send it to the Australian Taxation Office, which will then search on your behalf.

How do you access superannuation?

Accessing your superannuation is a simple administrative procedure – you just ask your fund to pay it. You can access your superannuation in three different ways:

  • Lump sum
  • Account-based pension
  • Part lump sum and part account-based pension

However, please note that your superannuation fund will only be able to make a payout if you meet the ‘conditions of release’. The conditions of release say you can claim your super when you reach:

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

The preservation age has six different categories:

Date of birth Preservation age
Before 1 July 1960 55
1 July 1960 – 30 June 1961 56
1 July 1961 – 30 June 1962 57
1 July 1962 – 30 June 1963 58
1 July 1963 – 30 June 1964 59
From 1 July 1964 60

There are also seven special circumstances under which you can claim your superannuation:

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

What contributions can SMSFs accept?

SMSFs can accept mandated employer contributions from an employer at any time (Funds need an electronic service address to receive the contributions).

However, SMSFs can’t accept contributions from members who don’t have tax file numbers.

Also, they generally can’t accept assets as contributions from members and they generally can’t accept non-mandated contributions for members who are 75 or older.

How does the age pension work?

Most Australians who are of retirement age can qualify for the age pension. However, depending on the size of your assets and post-retirement income, you might be entitled to only a reduced pension. In some instances, you might not be entitled to any pension payments.