Retail superannuation funds are just one of the many Australian superannuation funds on offer to Australian workers. They are run for profit and offer a wide range of investments.
Anyone can join a retail super fund, and just like all other super funds there are pros and cons. Retail super funds are the largest sector in the Australian superannuation market.
What is a retail super fund?
Retail superannuation funds are run by banks and other financial institutions. These superannuation funds, which are run by the likes of the Commonwealth Bank, ANZ, Westpac, Suncorp, ING and other Australian banks, are run to generate a profit for their shareholders.
There are a lot of investment options in a retail super fund with most funds offering hundreds of choices. The investments range from Australian shares, property, cash, international shares or could even be made up of a mixture of all these.
Originally retail super funds were developed by banks, investment institutions and insurance companies to cater for savvy people keen to save for their retirement.
Who offers retail super funds?
There are many Australia banks, big investment firms and insurance companies who operate retail super funds. The big four banks (Commonwealth Bank, NAB, ANZ and Westpac) all have retail superannuation funds on offer.
Other Australian banks offering retail super funds include ING, Bendigo Bank, Suncorp and AMP. Some prominent financial companies offer retail super funds as well. Investment companies like Virgin Money, MLC and Perpetual have their own retail super funds as well.
Can anyone join a retail super fund?
Yes, retail super funds are open to anyone, but they are not always suitable for everyone. Always do your research before committing to a super fund.
Traditionally, retail funds were set up for white-collar workers who often worked for the institutions their superannuation was invested in, but today anyone is welcome to join retail super funds.
How does a retail superannuation fund work?
Just like other superannuation funds, members of a retail superannuation fund will have their money invested into different shares, stocks and investments. This is done by professional investment managers.
The money in your retail super fund comes from contributions made by your employer as well as any extras you put into it. This money is kept away and is accessed when you retire.
Retail super funds are usually accumulation funds, which aim to grow funds that are held in the accounts over time. Due to the investments it is important to note that with an accumulation fund you run the risk that when you retire, your super payout can be lower if financial markets have recently fallen or continue to fall during your retirement.
What are the pros and cons of retail super funds?
Just like all Australian superannuation funds, there are pros and cons. If you are considering signing up to a retail super fund you should consider all angles and what super fund is best for you.
- Anyone can join a retail superannuation fund.
- They usually offer a large number of investment options and choices.
- Wide range of costs for different funds means they are accessible for different levels of income and super contributions.
- Retail super funds are usually accumulation funds.
- They can offer members a range of insurances on their superannuation funds.
- Retail super funds are run to generate corporate profits, which are passed on as dividends to the company’s shareholders, not as profits to super fund members.
- Accumulation funds can be impacted by global financial market turbulence.
You should always consider your personal retirement and lifestyle choices before committing to any specific superannuation fund.
What other types of super fund are out there?
A retail superannuation fund is just the tip of the iceberg in terms of Australian super funds on offer. There are other types of funds, all with different pros and cons associated with them, each aimed at fitting different lifestyles and financial situations.
Self-managed super funds put you in the driving seat of your own superannuation. A self-managed super fund makes you the manager of your super finances instead of a professional investor or fund manager, giving you more control over your superannuation investments. Unlike other superannuation funds, a self-managed fund requires a lot of time and commitment, and there are risks involved in managing your own superannuation.
Industry superannuation funds are the main competition for retail superannuation funds. They are sometimes restricted to workers of a particular industry and tend to be run not-for-profit, meaning they give their profits back to their members. Industry super funds tend not to be operated by the Australian big four banks (Commonwealth Bank, NAB, ANZ Bank and Westpac) because they are run not-for-profit.
Public sector superannuation funds are almost exclusive to employees of the federal and state government. They were created to cater to employees of many different government departments, who are often paid more than the normal contribution rate. Public sector super funds tend to have low fees and offer a medium range of investment options.
What should you look for when choosing a fund?
The number one thing you need to consider when choosing a retail super fund, or any other fund out on the market, is your own personal goals, lifestyle and financial situation.
It is always important to consider all super funds on the market so you can get the best possible deal and the most possible growth in your superannuation fund.
We all want to be able to retire comfortably, so setting up the right Australian super fund for you is important.
There are some questions you should ask yourself when choosing your Australian superannuation fund:
- What are my long-term and short-term life goals?
- Do I own property?
- How much will I need when I retire?
- What do I want to do in my retirement?
- At what age do I want to retire?
These are some but not all of the things you need to consider when looking for the right super fund.
Always chat to your employer about your options, because depending on your employment situation you may or may not be able to choose your own individual superannuation fund.
How can I access my super?
When you retire, you’ll need to assess a few things about your superannuation. You need to decide if you want your super as a regular pension, a big lump sum or a combination of both of these options.
You access your super after you’ve retired. Each super fund offers different levels of access to your superannuation so it is best to always understand the ins and outs of each fund depending on your own retirement goals.
How much superannuation will I get?
Your final superannuation payout will depend on a few things:
- How much your employer contributed across your life.
- How much you personally contributed into your personal super fund.
- The investment returns in your super fund.
- The amount of fees and charges you paid on your account.
- The amount of tax you paid across your lifetime.
There are always variables to all of these depending on your choice of superannuation fund.