Canstar News - March 16th
Assistant Treasurer Michael Sukkar has refused to rule out changing superannuation policy to allow everyday Australians the opportunity to enter the property market earlier by allowing them to dip into their super savings. According to Sky…– Read more
Canstar News - March 15th
Unfortunately for Sydneysiders, housing affordability is a particularly serious challenge. Only 65% of Sydney residents are homeowners by the age of 60, compared to 80% for the rest of the country. To retire comfortably in a…– Read more
Managed Funds - March 14th
Co-author: Ryan O'Sullivan Some investors might think that willingly choosing to ignore certain industries and companies due to their unethical business practices would result in inferior returns compared to an all-inclusive fund. However, the Responsible Investment Benchmark…– Read more
CANSTAR compares superannuation using a unique star ratings methodology that compares both cost and features across superannuation products. CANSTAR star ratings represent a shortlist of products, enabling consumers to easily compare super funds and narrow their search to products that have been assessed and ranked.
Use the selector tool at the top of this page to compare super funds using our star ratings. Find out what to look for in a super fund here.
Superannuation is the portion of your earnings and savings that is placed in a fund to be held in trust until your retirement. The objective of superannuation is to provide income in retirement that substitutes or supplements the Australian Age Pension.
The money that is held for you within a superannuation fund is invested in a range of assets (that you can choose). The income earned by your superannuation investments are taxed concessionally.
Given that superannuation will represent the bulk of retirement savings for many Australians in the future, choosing a superannuation fund should be a well-researched strategic decision. Read more about what superannuation is here, what the different types of super funds are and what different super investment options mean.
Written by: TJ Ryan
Please note that these are a general explanation of the meaning of terms used in relation to superannuation funds and related investment activities.
Policy wording may use different terms and you should read the terms and conditions of the relevant policy to understand the inclusions and exclusions of that policy. You cannot rely on these terms to the part of any policy you may purchase.
Refer to the product disclosure statement and CANSTAR’s FSCG.
Account-based income stream/account-based pension – A pension paid (generally on retirement) from superannuation benefits standing to the credit of your account. For most people aged 60 and over, these pension payments have been tax-free since July 2007. Previously, they were known as allocated pensions.
Benchmark – Usually represents the minimum performance objective for an investment portfolio.
Concessional contributions – Superannuation contributions made from before-tax income for which a tax deduction can be claimed. They are also referred to as deductible contributions. Concessional contributions include employer Superannuation Guarantee (SG) contributions, additional employer contributions (salary sacrifice) and contributions made by the self-employed for which they claim a tax deduction.
Contribution cap – This is the limit on the amount of contributions that can be made for an individual. Contributions in excess of the cap will be subject to excess contributions tax. Concessional and non-concessional contributions have different cap amounts.
Dividend – The amount a company pays out to its shareholders from its after-tax earnings. For individual shareholders, the payout is in proportion to the number of shares held. When company profits are down, the company may decide to pay a reduced dividend, or no dividend at all.
Excess concessional contributions tax – A tax of 31.5% on your super contributions over the concessional contributions cap.
Investment fee – How much you must pay your investment manager, or the MER %. This typically depends on the investment option you choose.
Management fee – How much it costs to pay the fund for managing your super balance, this is usually tiered by balance level.
MER % – The management expense ratio, or what proportion of your investments you must pay your investment manager. For example: In an equity fund where the historical gross return might be 10%, a 1% expense ratio will consume approximately 10% of the investor’s return. In a bond fund where the historical gross return might be 8%, a 1% expense ratio will consume approximately 12.5% of the investor’s return. In a money market fund where the historical gross return might be 5%, a 1% expense ratio will consume approximately 20% of the investor’ historical total return.
Non-concessional contributions – These are contributions made from a person’s after-tax income. The terms ‘non-concessional contributions’, ‘post-tax contributions; and after-tax- contribution’ are often used interchangeably.
PDS – Product disclosure statement.
Performance fee – how much you have to pay your investment manager for exceeding benchmarked performance.
Preservation age – The minimum age at which members can access their superannuation benefits, provided you have permanently retired from the workforce.
Salary sacrifice – An agreed arrangement between an employer and an employee whereby the employee agrees to sacrifice a part of their gross salary in exchange for a benefit, such as extra employer contributions to superannuation. An annual contribution limit applies.
Superannuation Guarantee (SG) – Employer contributions are usually called Superannuation Guarantee (SG) contributions. Currently the minimum level of SG contributions is the equivalent of 9% of ordinary time earnings. This money is not taken out of your wage or salary; it is paid in addition to your wage or salary. An annual contribution limit applies.
Transition to retirement – An income stream that you can use before you are 65 years old, in order to transition into retirement by working fewer hours and supplementing your salary with income from your super.
Withdrawal fee – A fee that a fund may charge when you make a full or partial withdrawal.
There are more than 350 super funds in the market that are classified as personal super, corporate super, SMSF products, public sector super, wrap/platform accounts, industry funds, retail funds, master trusts, etc. Many of these funds are not available directly to the average person. The customer may be required to be employed by a particular government department or large corporation, or it may be necessary to see a financial planner first.
We have therefore limited our superannuation star ratings to funds that are available to the average person, where anyone can apply directly to the fund.
We have focused on the accumulation stage, when funds are being contributed to superannuation, not the drawdown stage following retirement. We have not credit rated the super fund managers.
The superannuation, SMSF and account-based pension funds that CANSTAR has assessed for its 2016 Star Ratings are listed below: