Industry, Retail & Wrap Platforms – Super Funds & Investments
With so many Superannuation Providers, ensuring you choose the best possible offering for you personally can be an overwhelming prospect, however, it often pays to spend some time considering the differences between:
- An Industry Fund
- An Employer Retail Fund
- A Platform or Wrap Retail Fund
- A Self Managed Super Fund
- Other
Depending on your personal circumstances, the total value of your Super account(s) – things to consider are:
- Provider Costs
- Investment Costs
- Investment Asset choices (ie how many managed funds? Do they offer ETFs, Direct Shares, Term Deposits, Overseas Shares etc?)
- Investment Risk versatility
Types of super funds
There are two types of super funds: defined benefit funds and accumulation funds. Most super funds are accumulation funds.
Accumulation funds
In an accumulation fund, your money grows or ‘accumulates’ over time.
The value of your super depends on the money that you and your employers put in (known as super contributions), and on the investment return generated by the fund after fees and costs.
Defined benefit funds
In a defined benefit fund, your retirement benefit is determined by formula instead of being based on investment return.
Most defined benefit funds are corporate or public sector funds. Many are now closed to new members.
Typically, your benefit is calculated using:
- the money put in by you and your employer
- your average salary over the last few years before you retire
- the number of years you worked for your employer
- If you’re thinking about leaving a defined benefit fund, get professional advice. Some funds are very generous, so make sure you’ll be better off. If you leave, you can’t rejoin.
MySuper
MySuper is a type of product you can have with a super fund.
It’s the default product that your employer will pay your super into, unless you choose a different option.
MySuper products typically offer:
- lower fees
- simple features – so you don’t pay for services you don’t need either a ‘single diversified’ or a ‘lifecycle’ investment option.
Even if you’ve already chosen a super investment option within your existing fund, you can choose to move to a MySuper option.
What to do if your MySuper product is underperforming
If you have a MySuper product, your super fund must let you know if it has performed badly under an annual performance test done by the Australian
Prudential Regulation Authority (APRA).
To help you make a decision about whether to switch funds and which product to switch to, you can use the ATO’s YourSuper comparison tool.