How to choose a super fund
Most Australian workers can choose the superannuation fund into which their super contributions are made. We take a look at how this process works.
Generally speaking, an employee can choose the super fund they want their super contributions paid into by filling out the Australian Taxation Office’s Superannuation standard choice formwhen they start a new job. This form is generally provided by your employer.
While the ability to choose their own super fund has given workers a certain degree of power, the actual choice of a fund can sometimes feel rather complex, with a large number of products from both retail and industry funds vying for consumers’ investment dollars.
There are many superannuation funds – and thousands of superannuation investment options – to choose from in Australia. When choosing a super fund, we’d recommend you compare your options based on factors that are important to you, which could include competitive fees, strong past performance, a good combination of investment and insurance options, and other services that may be important to you such as easy online rollover of funds.
So when assessing a super fund, you should consider questions like:
- Does the super fund have competitive fees?
- Does the superannuation fund have a good selection of investment options?
- Does the superannuation fund have a good long-term track record?
- What insurance options does the superannuation fund offer?
- What other services does the superannuation fund offer?
A proactive choice early in your working career has the potential to significantly enhance your retirement nest egg.
Compare Superannuation with Canstar
The table below displays some of the superannuation funds currently available on Canstar’s database for Australians aged 30 to 39 with a super balance of up to $55,000. The results shown are sorted by Star Rating (highest to lowest) and then by 5 year return (highest to lowest). Performance figures shown reflect net investment performance, i.e. net of investment tax, investment management fees and the applicable administration fees based on an account balance of $50,000. To learn more about performance information, click here. Consider the Target Market Determination (TMD) before making a purchase decision. Contact the product issuer directly for a copy of the TMD. Use Canstar’s superannuation comparison selector to view a wider range of super funds. Canstar may earn a fee for referrals.
- Performance, fee and other information displayed in the table has been updated from time to time since the rating date and may not reflect the products as rated.
- The performance and fee information shown in the table is for the investment option used by Canstar in rating of the superannuation product.
- Performance information shown is for the historical periods up to 31/01/2024 and investment options noted in the table information.
- Performance figures shown reflect net investment performance, i.e. net of investment tax, investment management fees and the applicable administration fees based on an account balance of $50,000. To learn more about performance information, click here.
- Performance data may not be available for some products. This is indicated in the tables by a note referring the user to the product provider, or by no performance information being shown.
- Please note that all information about performance returns is historical. Past performance should not be relied upon as an indicator of future performance; unit prices and the value of your investment may fall as well as rise.
- Any advice on this page is general and has not taken into account your objectives, financial situation or needs. Consider whether this general financial advice is right for your personal circumstances. You may need financial advice from a qualified adviser. Canstar is not providing a recommendation for your individual circumstances. See our Detailed Disclosure.
- Not all superannuation funds in the market are listed, and the list above may not include all features relevant to you. Canstar is not providing a recommendation for your individual circumstances.
- Canstar may earn a fee for referrals from its website tables, and from Sponsorship or Promotion of certain products. Fees payable by product providers for referrals and Sponsorship or Promotion may vary between providers, website position, and revenue model. Sponsorship or Promotion fees may be higher than referral fees. Sponsored or Promotion products are clearly disclosed as such on website pages. They may appear in a number of areas of the website such as in comparison tables, on hub pages and in articles. Sponsored or Promotion products may be displayed in a fixed position in a table, regardless of the product’s rating, price or other attributes. The table position of a Sponsored or Promoted product does not indicate any ranking or rating by Canstar. For more information please see How We Get Paid.
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Performance and Investment Allocation Differences
- Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology.
- Some providers use different age groups for their investment profiles which may result in you being offered or being eligible for a different product to what is displayed in the table. See here for more details.
- Australian Retirement Trust Super Savings’ allocation of funds for investors aged 55-99 differ from Canstar’s methodology – see details here.
- The Australian Retirement Trust Super Savings (formerly Sunsuper for Life) product may appear in the table multiple times. While you will not be offered any single investment option, this is to take into account the different combinations of investment options Australian Retirement Trust may apply to your account based on your age. For more detail in relation to the Australian Retirement Trust (formerly SunSuper for Life) product please refer to the PDS issued by Australian Retirement Trust for this product.
- Investment profiles applied initially may change over time in line with an investor’s age. See the provider’s Product Disclosure Statement and TMD and in particular applicable age groups for more information about how providers determine their investment profiles.
Does the super fund have competitive fees?
Administration and fund management fees can differ widely from fund to fund and from investment option to investment option. While an extra 0.50% per year in fees may not seem very much when your account balance is small, that extra fee margin can add up to a large dollar value as your account balance grows. The hypothetical examples in the table below illustrate how this could work.
Difference 0.50% in fees can have on retirement balance
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Scenario 1 | Scenario 2 | |
---|---|---|
Starting age | 25 | 25 |
Retirement age | 67 | 67 |
Starting gross annual income |
$77,948 | $77,948 |
Starting balance | $25,096 | $25,096 |
Average investment returns |
6.85% | 6.85% |
Fees as a percentage of balance |
1.00% | 1.50% |
Average life insurance premium |
$194 | $194 |
Account balance at retirement |
$795,339 | $689,683 |
Difference to Scenario 1 retirement balance |
– | -$105,656 |
Source: www.canstar.com.au. Prepared on 24/01/2022 based on data available as at that date. Scenarios begin at the start of the 2021-22 financial year and are based on a 25-year-old with a starting balance of $25,096 (per the average from APRA’s Annual Superannuation Bulletin for a 25- to 34-year-old) with a starting gross annual income of $77,948 (the median figure for an employee working full-time in their main job per the ABS’ Characteristics of Employment data), growing 2.5% annually (per the RBA’s inflation target), retiring at age 67. SG contribution amounts are per government-announced rates and assumed to be paid into superannuation fund quarterly. Employer contributions are assumed to be taxed at 15%. Investment returns assumed to be 6.85% p.a. based on the average 10-year annualised rate of return per the APRA Superannuation Bulletin (June 2020). Net performance deducts fees of 0.75% p.a. or 1.5% p.a. of balance for scenario 1 and 2 respectively. An average life and TPD insurance premium of $193.61, growing 2.5% annually (per the RBA’s inflation target), is assumed to be charged at the end of each year based on products available for a 25-year-old on Canstar’s database. End balances at retirement are shown in “today’s dollars”, i.e. they have been adjusted for inflation. Please note all information on income, annual superannuation fees and performance returns are used for illustrative purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance.
Does the superannuation fund have a good selection of investment options?
Superannuation is an investment structure designed to give you a nest egg of savings for your retirement.
It is the underlying investments that you choose to hold within that structure that will determine the performance of your investment. Those investments could include cash, bonds, property, Australian shares or international shares, or could be a mixture of all these asset classes.
Consider professional financial or superannuation advice on what asset classes would suit your situation, and ensure that your superannuation fund of choice has something suitable.
Does the superannuation fund have a good long-term track record?
Superannuation is a structure set up for the purpose of helping Australians save for their retirement.
Being a long-term investment, performance is one of the most crucial factors to consider when choosing a super fund. Small differences in performance can make a big difference to your retirement nest egg.
Small differences in fees can also make a big difference, as highlighted above, so it’s important to consider both in relation to each other. You may also wish to investigate the performance of ethical investments when you’re considering all of your super options.
While past performance is not a reliable indicator of future performance, a good long-term return will boost your retirement nest egg and even a 1% difference can add up to a lot of money by retirement.
The hypothetical examples in the table below highlight the significant effect that even a 1% or 2% difference in annual performance could have on a person’s super account by retirement.
Difference 1% in earnings can have on retirement balance
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Scenario 1 | Scenario 2 | Scenario 3 | |
---|---|---|---|
Starting age | 25 | 25 | 25 |
Retirement age | 67 | 67 | 67 |
Starting gross annual income |
$77,948 | $77,948 | $77,948 |
Starting balance | $25,096 | $25,096 | $25,096 |
Investment returns | 6% | 7% | 8% |
Fees as a percentage of balance |
1.21% | 1.21% | 1.21% |
Average life insurance premium |
$194 | $194 | $194 |
Account balance at retirement |
$603,459 | $778,572 | $1,015,687 |
Difference to Scenario 1 retirement balance |
– | $175,113 | $412,228 |
Source: www.canstar.com.au. Prepared on 24/01/2022 based on data available as at that date. Scenarios begin at the start of the 2021-22 financial year and are based on a 25-year-old with a starting balance of $25,096 (per the average from APRA’s Annual Superannuation Bulletin for a 25- to 34-year-old) with a starting gross annual income of $77,948 (the median figure for an employee working full-time in their main job per the ABS’ Characteristics of Employment data), growing 2.5% annually (per the RBA’s inflation target), retiring at age 67. SG contribution amounts are per government-announced rates and assumed to be paid into superannuation fund quarterly. Employer contributions are assumed to be taxed at 15%. Investment returns assumed to be 6%, 7% or 8% p.a. for scenario 1, 2 and 3 respectively. An average life and TPD insurance premium of $193.61, growing 2.5% annually (per the RBA’s inflation target), and net performance fees of 1.21% are assumed to be charged at the end of each year based on products available for a 25-year-old on Canstar’s database. End balances at retirement are shown in “today’s dollars”, i.e. they have been adjusted for inflation. Please note all information on income, annual superannuation fees and performance returns are used for illustrative purposes only. Actual returns and the value of your investment may fall as well as rise from year to year; this example does not take such variation into account. Past performance is not a reliable indicator of future performance.
What insurance options does the superannuation fund offer?
Many superannuation funds offer a level of personal insurance cover and the premiums can be cost-effective for some workers, although it is worth knowing that the level of default cover may be limited should you need to make a claim in the future, and exclusions can apply.
It is best to check the PDS and contact your super fund for further details. The types of insurance that may be included in your superannuation fund are:
- Life insurance – generally provides a lump sum payment to your beneficiaries upon your death or diagnosis with a terminal illness.
- Total and permanent disability (TPD) insurance – pays you a lump sum if you become totally and permanently disabled. The definition of total and permanent disability varies between insurance providers but it typically means that you are disabled to the extent that you will be unable to work again, either in your current job or in any job you’re qualified for.
- Income protection insurance – insures you for a set proportion of your income for a certain length of time in the event that you cannot work temporarily due to illness or injury. There are a range of income protection insurance options to compare.
→ Related article: Advantages and disadvantages of having life insurance through super
What other services does the superannuation fund offer?
There are a number of other features super funds may offer, so it could be worth thinking about which ones are most important to you.
For example, can you access your account details online? Is it easy to make additional contributions into your account? Does the fund offer the option for personal financial planning advice? Does the fund offer member education, retirement planning advice, or online superannuation calculators? The list goes on.
Consider making a checklist of what services you are looking for are and asking your fund whether it provides them.
Don’t forget, your superannuation is your money. Researching your options and choosing a super fund to suit your needs is worth the effort. You may wish to seek advice from a qualified adviser to help you reach a decision.
To view the past performance of all super funds rated by Canstar, use our comparison tool:
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Canstar may earn a fee for referrals from its website tables and from Promotion or Sponsorship of certain products. Fees payable by product providers for referrals and Sponsorship or Promotion may vary between providers, website position, and revenue model. Sponsorship or Promotion fees may be higher than referral fees.
On our ratings results, comparison tables and some other advertising, we may provide links to third party websites. The primary purpose of these links is to help consumers continue their journey from the ‘research phase’ to the ‘purchasing’ phase. If customers purchase a product after clicking a certain link, Canstar may be paid a commission or fee by the referral partner. Where products are displayed in a comparison table, the display order is not influenced by commercial arrangements and the display sort order is disclosed at the top of the table.
Sponsored or Promoted products are clearly disclosed as such on the website page. They may appear in a number of areas of the website, such as in comparison tables, on hub pages, and in articles. The table position of the Sponsored or Promoted product does not indicate any ranking or rating by Canstar.
Sponsored or Promoted products table
- Sponsored or promoted products that are in a table separate to the comparison tables in this article are displayed from lowest to highest annual cost.
- Performance figures shown for Sponsored or Promoted products reflect net investment performance, i.e. net of investment tax, investment management fees and the applicable administration fees based on an account balance of $50,000. To learn more about performance information, click here.
- Please note that all information about performance returns is historical. Past performance should not be relied upon as an indicator of future performance; unit prices and the value of your investment may fall as well as rise.
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This article was reviewed by our Sub Editor Jacqueline Belesky before it was updated, as part of our fact-checking process.
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