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.
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 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 could lead to higher returns and grow your wealth, but a more conservative investment strategy could help keep your retirement wealth more secure.
- 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?
- Type of fund – Retail funds, industry funds, self-managed funds and other types of super funds each have their own pros and cons.
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.
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.