Best Super Funds for Low-Income Earners

Regardless of your income, finding a super fund that offers you good value and healthy returns can be a big factor in determining how much money you will have to help fund your retirement. In fact, it can be particularly important if you’re on a low income and looking to make it go further.

While there are a number of government initiatives in place designed to help boost the super balances of low-income earners, choosing an appropriate fund for your circumstances can arguably be just as important.

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Let’s run through:

  • What you may want to look for in a super fund as a low-income earner
  • Some strategies that may be available to you if you’re looking to give your super a boost

What should low-income earners consider looking for in a super fund?

Low fees

If you expect your super to grow at a relatively slow pace, finding a super fund with low fees could help you maximise the amount of money you’ll have come retirement. High fees could potentially chew away at your super balance and make building for a comfortable retirement that bit harder.

In summary, super funds typically charge three kinds of fees to their members on a regular basis: administration fees, investment fees (also referred to as management expense ratios or MERs), and potentially a performance fee depending on how well your fund performs for the financial year. Additionally, if you have life or total and permanent disability (TPD) insurance through your fund you may pay a small regular premium for these.

Check the Product Disclosure Statement (PDS) of any superannuation fund you’re considering to see if they charge any other kinds of fees that could potentially erode your balance over time. You can also get clear on what your current fund is charging you in fees by taking a look at your super statement.

If you’re looking for a low-fee super fund, you can view the lowest-fee super funds on Canstar’s database (for various balances) here. You can also see a snapshot of low-fee super funds for low balances in the table below.

The following table contains a snapshot of 5-Star Rated superannuation funds in the Canstar database, based on someone aged 30-39 with a balance between $0-55k. This table has been sorted by annual cost at $30k balance (lowest to highest), and then by provider name.

Please note that the performance information shown in the table is for the investment option used by Canstar in rating of the superannuation product. When selecting a super fund, bear in mind that investments can go up and down, so past performance is not necessarily indicative of future performance. Before committing to a particular super fund, check upfront with the provider and read the PDS to confirm the fees you will be charged, and whether the fund suits your needs.

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Strong performance

Something you may also decide to factor in when you compare super funds is performance. This is essentially how much the fund delivers its members in investment returns and can be a big factor in determining how much your super will grow by.

Even a fraction of a percent worth of difference in performance can have a serious impact on how much you retire with – it could even be the difference between a modest or a comfortable retirement.

You can take a look at the top-performing super funds on Canstar’s database over one, three, and seven years hereAdditionally, the table below displays a selection of super funds sorted by their performance over a three-year period.

The following table contains details a snapshot of 5-Star Rated superannuation funds in the Canstar database, based on someone aged 30-39 with a balance between $0-55k. This table has been sorted by 3-year return (highest to lowest), and then by provider name.

Please note that the performance information shown in the table is for the investment option used by Canstar in rating of the superannuation product. When selecting a super fund, bear in mind that investments can go up and down, so past performance is not necessarily indicative of future performance. Before committing to a particular super fund, check upfront with the provider and read the PDS to confirm the fees you will be charged, and whether the fund suits your needs.

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How can low-income earners possibly boost their super balance?

If you’re worried about not having adequate super in retirement, there are a handful of things to consider that could potentially increase the rate at which your super grows year-on-year. They include:

  • Making a small regular salary sacrifice, or ‘concessional contribution’ on top of the mandatory contributions your employer makes
  • The low-income superannuation tax offset
  • If you have a spouse who earns more than you, they could consider making contributions to your super
  • Consider consolidating your super accounts to save on duplicate fees
  • Track down any lost super accounts you might have

Some of these may have tax implications for you, so consider contacting the ATO or seeking professional tax advice if you would like more information. In addition, you can compare super funds with Canstar to help you find one that suits your needs.

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