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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.

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.

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 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 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 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 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).

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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.

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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

How many superannuation funds are there?

There are more than 200 different superannuation funds.

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 I set up an SMSF?

Setting up an SMSF takes more work than registering with an ordinary superannuation fund. 

An SMSF is a type of trust, so if you want to create an SMSF, you first have to create a trust.

To create a trust, you will need trustees, who must sign a trustee declaration. You will also need identifiable beneficiaries and assets for the fund – although these can be as little as a few dollars.

You will also need to create a trust deed, which is a document that lays out the rules of your SMSF. The trust deed must be prepared by a qualified professional and signed by all trustees.

To qualify as an Australian superannuation fund, the SMSF must meet these three criteria:

  • The fund must be established in Australia – or at least one of its assets must be located in Australia
  • The central management and control of the fund must ordinarily be in Australia
  • The fund must have active members who are Australian residents and who hold at least 50 per cent of the fund’s assets – or it must have no active members

Once your SMSF is established and all trustees have signed a trustee declaration, you have 60 days to apply for an Australian Business Number (ABN).

When completing the ABN application, you should ask for a tax file number for your fund. You should also ask for the fund to be regulated by the Australian Taxation Office – otherwise it won’t receive tax concessions.

Your next step is to open a bank account in your fund’s name. This account must be kept separated from the accounts held by the trustees and any related employers.

Your SMSF will also need an electronic service address, so it can receive contributions.

Finally, you will need to create an investment strategy, which explains how your fund will invest its money, and an exit strategy, which explains how and why it would ever close.

Please note that you can pay an adviser to set up your SMSF. You might also want to take the Self-Managed Superannuation Fund Trustee Education Program, which is a free program that has been created by CPA Australia and Chartered Accountants Australia & New Zealand.

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 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?

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.

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 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 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 happens to my superannuation when I change jobs?

You can keep your superannuation fund for as long as you like, so nothing happens when you change jobs. Please note that some superannuation funds have special features for people who work with certain employers, so these features may no longer be available if you change jobs.

What is superannuation?

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