Superannuation (also known as ‘super’) is a compulsory savings scheme that puts aside some of an Australian employee’s income, so they have a nest egg waiting for them when they retire.

Different super funds offer different investment options to help you grow your retirement savings, as well as additional features and benefits. There are also different fees and charges that may apply, so 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

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; a policy known as the ‘superannuation guarantee’ or SG. Employers must make SG contributions into your super account at least once every three months. 

If you are over the age of 18, reach the income threshold of $450 or more before income tax each calendar month, or work 30 hours or more a week you qualify for the superannuation guarantee. This applies to full-time and part-time employees, and some casual employees. It also includes temporary residents to Australia. 

This super guarantee contribution rate is scheduled to increase at annual intervals in 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. That said, it's possible that these increases to the super guarantee rate could be delayed, depending on Australia's economic situation. 

As well as employer contributions, you may also choose to make extra personal contributions towards your super, such as through a 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, including information on concessional contributions cap amounts and non-concessional contributions.

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

Once you reach a certain age, you can start your transition to retirement by accessing money from your super fund as an income stream to help pay for your lifestyle, reducing your reliance on any age pension you may be eligible for.

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 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

Those six types of superannuation funds come in two different flavours:

  • Accumulation funds 
  • Defined-benefits funds

Most Australians are in accumulation funds. When you retire, the fund will pay you whatever superannuation you accumulated during your working life.

Other Australians are in defined-benefit funds. When you retire as an eligible employee, you’ll receive payment based on a formula. For example, you might receive an ongoing payment as retirement income calculated as a percentage of your final salary, or a lump sum calculated on the number of years you spent with your employer. Defined-benefit funds tend to be:

  • Used only by corporate or public sector super funds
  • Closed to new members

What type of superannuation should you get?

Few Australians now have the chance to register with a defined-benefit scheme, so you will most likely use an accumulation scheme.

As a result, there are really only two questions you need to ask when comparing super:

  1. Do I want to manage how my superannuation is invested, or do I want professionals to manage it for me?
  2. If I want professionals to manage my superannuation, do I want to register with a retail fund, an industry fund, a public sector fund or a corporate fund?

A self-managed super fund (SMSF) is an arrangement where you look after your retirement savings yourself. This can include investing your superannuation into a property portfolio. However, setting up and managing an SMSF can be complex, and there are many rules and regulations to consider - contact the Australian Taxation Office (ATO) to learn more.

According to a 2019 report from ASIC, Australia’s financial services regulator, you may want to think twice about getting an SMSF if you:

  • Have a superannuation balance of less than $500,000
  • Want a simple super solution
  • Don’t want to manage your own investments
  • Don’t have enough time to manage your own investments
  • Don’t have enough skill to manage your own investments
  • Have a low level of financial literacy

If you don’t want to open a self-managed super fund, your next decision is what type of fund to choose – retail, industry, public sector or corporate.

You have a lot of choice when it comes to superannuation. There are about 190 different funds in Australia, although not all of these funds are open to everyone. So make sure you do your research and compare how different funds compare in terms of fees, investment options, investment performance, insurance options and customer service.

What can you use superannuation for?

Superannuation is meant to fund your retirement. So, apart from a few exceptions, you can only access your superannuation  in your latter years:

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

However, you may be able to access your superannuation early in some exceptional 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

How do you compare superannuation?

There are five main ways to compare superannuation funds:

1. Fees

While you may prefer to pay lower fees than higher fees when it comes to your superannuation, it’s still possible that a fund with higher fees might offer better value than one with lower fees.

Super funds might charge several different fees, including:

  • 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
  • The proportion of your super that would be going to each asset class

3. Investment performance

While you’re researching each fund’s investment options, you may also want to research how those 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

If you’re interested in taking out insurance via a super fund, consider investigating the different insurance offers, including their premiums and conditions. Super funds commonly offer three different types of insurance:

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

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.

Why should you compare superannuation?

Australians have access to hundreds of superannuation funds and tens of thousands of investment options, so it’s important you do your research so you can find the best super fund and best investment option for you.

Choosing the wrong super fund or investment option can be costly.

Imagine you worked from age 22 to 67 and earned an average salary of $75,000 the whole time. Your employers made a 9.5 per cent contribution to your super during this time under the super guarantee, and you made no additional superannuation payments.

According to the Moneysmart superannuation calculator, assuming your fund had a 0 per cent contribution fee and indirect cost ratio, a $74 annual admin fee, a 7.5 per cent investment return, 7 per cent tax on earnings, and 0.85 per cent investment fees, you would have $552,871 when you retire, having paid $140,427 in fees.

A small change to any of these assumptions could make a big difference to the final total available to you when you retire. For example, if you chose a different super fund in the above scenario that charged an annual admin fee of just $50, but had an indirect cost ratio of 0.6 per cent, you could end up retiring with $485,752, having paid $207,546 in fees over your working life.

It's important to not only compare the cost of different super funds, but the features and benefits they also provide. The best super fund for your financial situation may not be the same as for somebody else.

What features of superannuation should you look out for?

The five main features of superannuation are:

  • Fees – Does the fund have a competitive fee structure?
  • Investment options – Does the fund offer a suitable investment strategy and risk level?
  • Investment performance – Does the fund have a strong record over the past five years?
  • Insurance options – Does the fund have the right insurance products at a competitive price (assuming you want to take out insurance through your super)?
  • Customer service – Does the fund make it easy for you to manage your super?

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.

How do you choose a superannuation fund?

The first thing you need to do is check that you can, indeed, choose a superannuation fund. Most income earners will be able to choose their own super fund, but some workers may not be able to do so if their job is covered by a certain industrial agreement.

It’s also possible you may not want to choose an alternative super fund. Why? Well, some Australians in certain jobs have access to special ‘defined-benefit’ funds, which may offer more generous terms than the standard ‘accumulation’ funds used by most Australians.

If you are in a situation where you are choosing a super fund, whether you are a part-time worker or small business owner, your aim should be to find the best super fund for your financial needs.

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

How do you find the best superannuation fund?

The best superannuation fund is the one you believe will offer you the best value. 

The definition of ‘best’ will differ from person to person. Moneysmart suggests looking for a super fund that offers:

  • Performance
  • Low Fees
  • Insurance
  • Investment options
  • Services

What is the cheapest superannuation fund?

Identifying the cheapest superannuation fund in Australia is a challenging task for two reasons.

First, there are many different types of fees, including admin fees, investment fees, advice fees, switching fees, buy-sell spread fees, activity-based fees, indirect costs and insurance premiums. The same super fund might charge one set of fees to one member and a different set of fees to another member, depending on each member’s balance, activity, investment preferences and insurance preferences. The level of fees might also differ from person to person. So an apples-for-apples comparison may not always be possible.

Second, not only are there many different types of fees, there are also many different super funds. At any point in time, there’s a good chance that one of these funds could changed its fees. That means that even if you could make an apples-for-apples comparison to find the cheapest super fund, the identity of the cheapest fund might change regularly.

How can you apply for superannuation?

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.

Possible fees may include:

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

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 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 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 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

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 many superannuation funds are there?

There are more than 200 different superannuation funds.

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 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 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 is superannuation regulated?

The Australian Prudential Regulation Authority (APRA) regulates ordinary superannuation accounts. Self-managed superannuation funds (SMSFs) are regulated by the Australian Taxation Office.

What are the risks and challenges of an SMSF?

  • SMSFs have high set-up and running costs
  • They come with complicated compliance obligations
  • It takes a lot of time to research investment options
  • It can be difficult to make such big financial decisions

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).

When did superannuation start in Australia?

Australia’s modern superannuation system – in which employers make compulsory contributions to their employees – started in 1992. However, before that, there were various restricted superannuation schemes applying to certain employees in certain industries. The very first superannuation scheme was introduced in the 19th century.

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 lost 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.

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.

Am I entitled to superannuation if I'm not an Australian citizen?

Yes, permanent and temporary residents are entitled to superannuation.

How do you pay superannuation?

Superannuation is paid by employers to employees. Employers are required to pay superannuation to all their staff if the staff are:

  • Over 18 and earn more than $450 before tax in a calendar month
  • Under 18, work more than 30 hours per week and earn more than $450 before tax in a calendar month

This applies even if the staff are casual employees, part-time employees, contractors (provided the contract is mainly for their labour) or temporary residents.

Currently, the superannuation rate is currently 9.5 per cent of an employee’s ordinary time earnings. This 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.

Employers must pay superannuation at least four times per year. The due dates are 28 January, 28 April, 28 July and 28 October.

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