Most people can choose the super fund they want their super contributions paid into by filling out the Australian Taxation Office’s Superannuation standard choice form when they start a new job. This form is generally provided by your employer.
While the choice of superannuation fund initiative gave workers the power, the actual choice of a fund became very complex with a large number of products, including both retail and industry funds, vying for consumers’ investment dollars.
There are many superannuation funds – and thousands of superannuation investment options – to choose from. When choosing a super fund, we’d recommend you compare your options based on factors such as competitive fees, strong past performance, a good combination of investment and insurance options as well as other services, such as easy online roll-over of funds.
So when assessing a super fund, you should ask questions like:
A proactive choice early in your working career has the potential to significantly enhance your retirement nest egg.
5-Star Rated Superannuation Funds
If you’re considering outstanding value superannuation funds, the table below displays a snapshot of 5-Star Rated superannuation funds on Canstar for Australians aged 30-39, sorted by provider name (alphabetically). Please note the performance information shown in the table is for the investment option used by Canstar in rating the superannuation product. You can see the products most relevant to you by using the tabs to view results for a superannuation balance of $0-$55k, $55k-$100k or $100k-$250k. Use Canstar’s superannuation selector to view a wider range of super funds.
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.
Difference 0.50% in fees can have on retirement balance
|Scenario 1||Scenario 2|
|Gross Annual Income||$50,000 indexed at 2.5%||$50,000 indexed at 2.5%|
|Average Starting Balance||$23,749||$23,749|
|Annual Investment Returns||7.00%||7.00%|
|Annual Fees||1% of balance||1.5% of balance|
|Account Balance at Retirement – Today’s Dollars||$556,601||$480,533|
Source: www.canstar.com.au – 27/10/2020. Based on a 25-year-old with a starting balance of $23,749 per APRA’s Annual Superannuation Bulletin, starting gross annual income of $50,000, growing 2.50% annually, retiring at age 67. Employer contributions are presumed taxed at 15%. SG contribution amounts per Government-announced rates assumed to be paid into the superannuation account quarterly. Investment returns assumed to be 7% p.a. Net performance deducts fees of 1% p.a. and 1.50% p.a. for scenarios 1 and 2, respectively. Account balances at retirement are shown in “today’s dollars”, i.e. they have been adjusted for estimated inflation of 2.50% p.a. Please note all information on income, annual superannuation fees and investment returns are used for illustration 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.
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 range from cash, bonds, property, Australian shares or international shares, or could be a mixture of all these asset classes. Consider professional superannuation advice on what asset classes would suit your situation, and ensure that your superannuation fund of choice has something suitable.
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 very important factors that you need 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, 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.
Difference 1% earnings can have on retirement balance
|Scenario 1||Scenario 2||Scenario 3|
|Gross Annual Income||$50,000||$50,000||$50,000|
|Average Starting Balance||$23,749||$23,749||$23,749|
|Annual Investment Returns||6.00%||7.00%||8.00%|
|Annual Fees||1% of balance||1% of balance||1% of balance|
|Account Balance at Retirement – Today’s Dollars||$427,294||$556,601||$733,108|
Source: www.canstar.com.au – 27/10/2020. Based on a 25-year-old with a starting balance of $23,749 per APRA’s Annual Superannuation Bulletin, starting gross annual income of $50,000, growing 2.50% annually, retiring at age 67. Employer contributions are presumed taxed at 15%. SG contribution amounts per Government-announced rates assumed to be paid into the superannuation account quarterly. Investment returns assumed to be 6% p.a., 7% p.a. and 8% p.a. for scenarios 1, 2 and 3, respectively. Net performance deducts fees of 1% p.a. for scenarios 1, 2, and 3. Account balances at retirement are shown in “today’s dollars”, i.e. they have been adjusted for inflation of 2.50% p.a. Please note all information on income, annual superannuation fees and investment returns are used for illustration 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.
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.
- Total and Permanent Disability insurance – pays you a lump sum if you become totally and permanently disabled. The definition of total and permanent disability varies between insurance companies but it typically means that you are disabled to the extent that you will probably be unable to work again.
- Income Protection insurance – insures you for a set level of your income for a certain length of time in the event that you cannot work due to illness or injury. There are a range of income protection insurance options to compare.
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, online superannuation calculators… the list goes on.
There is a wealth of other services that may be important to you. Consider making a checklist of what those services 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:
Learn more about Super