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Superannuation (also known as ‘super’) is a compulsory savings scheme. It puts aside some of your income so you can have a nest egg waiting for you when you retire.

Different super funds offer different investment options to help you grow your retirement savings. There are also extra features, benefits, fees and charges to consider. It's important to compare different super options to make sure you choose a fund that best suits your financial situation.

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Learn more about superannuation

What's new in superannuation in April 2021?

It’s an unfortunate truth that not every Australian will have enough superannuation saved by the time they retire to enjoy a comfortable lifestyle. This may be especially true for women, who spend 12 years less in the full-time workforce than men on average, according to a recent survey.

Scheduled increases to the superannuation guarantee (SG), starting from 9.5 per cent to 10 percent in July 2021, and continuing to reach 12 per cent by July 2025, are meant to help make it easier for Australians to save more money for retirement. However, there are concerns that raising SG could come at the expense of wage growth, slowing down Australia’s economic recovery following the 2020 recession.

If you’re concerned that minimum SG contributions from your employer alone may not be enough to provide you with a comfortable retirement, you may want to consider your super fund. You can compare different super options to get a better idea of which funds may offer your preferred combination of risk, returns, features and other benefits to suit your situation. You can also look into other options to further boost your super, such as making a salary sacrifice arrangement with your employer, or making extra non-concessional contributions. Consider contacting a financial adviser before making any changes.

Updated by Mark Bristow on 8 April 2021

How does superannuation work?

Your employer is responsible for paying your superannuation.

Your annual superannuation must be at least 9.5 per cent of your ordinary time earnings. For example, if you earn $100,000 (before tax), your employer must pay you at least $9,500 in super per financial year. This is known as the ‘superannuation guarantee’ or SG. Employers must make SG contributions into your super account at least once every three months. 

You qualify for the superannuation guarantee if you are over the age of 18, earn $450 or more before income tax each calendar month, or work 30 hours or more a week. 

This applies to full-time and part-time employees, and some casual employees. It also includes temporary residents to Australia. 

The super guarantee contribution rate is scheduled to increase every year, starting from mid-2021. Each year, the SG rate should increase by 0.5 percent, until superannuation guarantee contributions reach 12 per cent in mid-2025. However, these increases to the super guarantee rate could be delayed, depending on Australia's economic situation. 

You may choose to pay extra money into your super fund, on top of what your employer is required to pay. This could include one-time payments, or a regular salary sacrifice arrangement with your employer. Some of these extra super contributions may be tax deductible - check with the Australian Taxation Office (ATO) for more details.

Many super funds invest your super contributions into an investment portfolio. This may help grow your wealth faster than you’d likely earn in interest simply by depositing this money in a savings account or term deposit. Different investment strategies may mean different returns on your investments.

Once you reach a certain age, you can start accessing money from your super fund as an income stream. This can help pay for your retirement lifestyle, reducing your reliance on the age pension.

Which superannuation fund should you choose?

Put simply, you should choose whatever superannuation fund you believe is the best.

Each person will have their own definition of ‘best’, depending on their preferences. For example, you may want to look for:

  • The fund that has delivered the highest net returns over the past five years
  • The fund that has earned the highest approval ratings on online review sites
  • The fund that has the most appealing investment options

Those are just examples – you might have your own definition of what constitutes the best super fund.

The key is to do your research, compare your options and then choose the super fund you believe is the best.

What are the benefits of superannuation?

There are two main benefits of superannuation:

  • You build a nest egg for retirement
  • You save and invest in a tax-effective structure (super is taxed at only 15 per cent)

What are the disadvantages of superannuation?

The main disadvantage of superannuation is that it is compulsory. So instead of getting access to your money today (in the form of a higher take-home salary), it gets locked away – potentially for decades.

What can you use superannuation for?

Superannuation is meant to fund your retirement. Apart from a few exceptions, you can only access your superannuation:

  • If you’re permanently retired and you reach your ‘preservation age’, which is between 55 and 60, depending on when you were born.
  • If you’re still working and you turn 65.

However, you may be able to access your superannuation early in some special circumstances, such as:

  • If you’ve suffered permanent or temporary incapacity
  • If you’ve received commonwealth benefits for 26 continuous weeks but still can’t meet your immediate living expenses
  • If you’re seriously ill and need to pay for medical treatment
  • If you have a terminal condition and are likely to die within two years

What types of superannuation are available?

There are six types of superannuation funds:

 Fund Description Availability
Retail super funds Run by for-profit institutions such as banks and financial services companies Everyone
Industry super funds Run by not-for-profit institutions Some industry funds restrict membership to certain industries 
Public sector super funds Created for federal and state government departments Public servants
Corporate super funds Run by companies Employees of those companies
Eligible rollover super funds Special holding accounts; can’t receive contributions from employers For lost members or inactive members with low balances
Self-managed super funds SMSFs are for Australians who want to manage their own investments Everyone

Most super funds are accumulation funds. When you retire, the fund will pay you whatever superannuation you saved up during your working life.

Some corporate or public sector super funds are defined-benefit funds, though most are closed to new members. When you retire as an eligible employee, you’ll receive payment based on a formula. For example, you might receive ongoing retirement income calculated as a percentage of your final salary. You might instead receive a lump sum calculated on the number of years you spent with your employer.

How do you compare superannuation?

Australians have access to hundreds of superannuation funds and tens of thousands of investment options. It’s important to do your research to find the best super fund and best investment option for you. Choosing the wrong super fund or investment option can be costly.

There are five main ways to compare superannuation funds:

1. Fees

You may prefer to pay lower fees than higher fees when it comes to your superannuation. However, a fund with higher fees might still offer better value than one with lower fees.

These fees may include:

  • Administration fees
  • Investment fees
  • Advice fees
  • Switching fees
  • Buy-sell spread fees
  • Activity-based fees
  • Indirect costs
  • Insurance premiums

2. Investment options

You may want to research the different investment options being offered with different super funds. You want to make sure you’re comfortable with:

  • The amount of risk you would be taking
  • The asset classes you would be investing in
  • How much of your super that would be going to each asset class

3. Investment performance

You may also want to research how each fund's investment options have been performing, such as by looking at their net returns (i.e. after fees). Moneysmart suggests comparing the performance of different funds over the last five years.

4. Insurance options

Super funds commonly offer three different types of insurance:

  • Life insurance
  • Total and permanent disability insurance
  • Income protection insurance

If you’re interested in a super fund with insurance, consider investigating the premiums and conditions.

5. Customer service

You may also want to learn more about what sort of customer service you might receive from different super funds. This might involve comparing the promises made by funds in their marketing with the feedback left on online review sites.

How do you find the best superannuation fund?

The best superannuation fund is the one you believe will offer you the best value. Each person will have their own definition of ‘best’, depending on what they prefer.

For example, you may want to look for:

  • The fund that has delivered the highest net returns over the past five years
  • The fund that has earned the highest approval ratings on online review sites
  • The fund that has the most appealing investment options

Those are just examples – you might have your own definition of what makes for the best super fund.

Does the best super fund have the best performance?

Looking at a super fund’s investment performance can be a useful comparison benchmark in some cases. For example, you could compare your current fund’s recent performance to another fund’s over the same period. 

However, just because a super fund has performed well over the past few years, that doesn’t guarantee it will be the best super fund for your financial situation. Past performance is not a reliable indicator of future performance. 

It’s important to consider the fees you may need to pay, as this could reduce the overall value offered by the fund. Additionally, a high-performance super fund may not offer the features and benefits that you’re interested in, such as ethical investing or access to insurance. 

Are performance-driven super funds more expensive in the long term?

Performance-driven super funds are more likely to offer active management of the fund’s investments, possibly with the help of professional fund managers. This could mean paying extra fees, such as admin fees, advice fees, and investment management fees. 

Some super funds also charge performance fees when the fund reaches a certain target. These fees may be calculated as a percentage of the investment returns in excess of the target. While these fees may be capped at an upper percentage limit, it’s still an extra cost.

It’s also important to keep in mind that if a super fund performs significantly better than its competition, you could still find yourself financially better off, even taking the performance fees into account.  

What is the cheapest superannuation fund?

Identifying the cheapest superannuation fund in Australia is difficult, for two reasons.

First, there are many different types of fees. The same super fund might charge different fees to different members, depending on each member’s balance, activity, investment preferences and insurance preferences. The fees might also differ from person to person. So an apples-for-apples comparison may not always be possible.

Second, there are many different super funds, which may change their fees at any time. Even if you could make an apples-for-apples comparison to find the cheapest super fund, the cheapest fund might change regularly.

How can you apply for superannuation?

Once you’ve chosen what you believe is the best super fund for your situation, contact the fund or visit their website for more information. Joining a super fund is usually a straightforward task.

You apply for superannuation by filling out a standard choice form. You will need to provide:

  • Personal details
  • Information about your preferred super fund

Your employer will also need to fill out part of the form.

How much does superannuation cost?

You don’t have to pay money to join a superannuation fund. However, the fund will charge you fees to manage your money, which will be taken out of your super balance.

How can RateCity help you save on superannuation?

You can use RateCity to compare superannuation funds and superannuation products, including:

  • Investment performance
  • Fees
  • Features
  • SuperRatings awards

You can then use that information to choose what you believe is the best superannuation fund for your situation.

Using RateCity's tables, you can quickly compare the rates of return for various super funds over the past five years, as well as fees, features and benefits. Remembers that a super fund's past return rates do not guarantee that you'll enjoy similar rates of return in the future.

Superannuation companies

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 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 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 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 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.

Click here for more information.

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.

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

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).

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.

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.

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.

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 is superannuation?

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

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 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.

What is the superannuation rate?

The superannuation rate, or guarantee rate, is the percentage of your salary that your employer must pay into your superannuation fund. The superannuation guarantee has been set 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 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

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.

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.