Industry vs retail super funds: what’s the difference?

TAMIKA SEETO
Finance Journalist · 24 February 2021
If you’re comparing superannuation funds, you might have come across the terms ‘industry’ and ‘retail’ super funds. So what’s the difference between the two?

What is an industry super fund?

Industry super funds were originally developed by trade unions and industry bodies to provide for their members in retirement. Originally, the various super funds were only available to people working in a certain industry, such as health or education. However, most industry super funds are now open to the public, so anyone can join. These are known as ‘public offer funds’.

Some of the biggest industry super funds include:

  • AustralianSuper
  • Aware Super
  • HESTA
  • Hostplus
  • Rest Super
  • Sunsuper
  • UniSuper

Industry funds are not-for-profit funds, which means profits are returned to their members. According to Moneysmart, industry super funds also typically range from low to medium cost.

While past performance is not a reliable indicator of future performance, the Productivity Commission’s report into super found that not-for-profit funds outperformed retail funds on average.

Compare industry superannuation funds

If you’re considering industry superannuation funds, the table below displays a snapshot of industry superannuation funds on Canstar’s database for Australians aged 30-39, sorted by Star Rating, then 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 for a wider range of super funds.

What is a retail super fund?

Retail super funds are typically run by banks, investment companies and other financial institutions. The company that owns the fund generally aims to keep some profit and this is paid to shareholders of the company. Membership is typically open to anyone.

Some companies offering large retail super funds include:

  • AMP superannuation
  • BT superannuation
  • Colonial First State superannuation (Commonwealth Bank)
  • MLC superannuation (IOOF Holdings)
  • OnePath superannuation (IOOF Holdings)

According to Moneysmart, retail super funds often offer a range of investment options. Most retail funds range from medium to high cost, it says, but some retail funds will offer a low-cost alternative.

Compare retail superannuation funds

If you’re considering retail superannuation funds, the table below displays a snapshot of retail superannuation funds on Canstar’s database for Australians aged 30-39, sorted by Star Rating, then 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 for a wider range of super funds.

What is the difference between industry and retail super funds?

The main difference between an industry super fund and a retail super fund is what they do with their profits. Industry super funds are not-for-profit and return any profits to their members, whereas retail super funds return their profits to shareholders.

According to APRA, industry funds hold more total superannuation assets than retail funds. As at 30 June 2020, industry funds held 26% of Australia’s $2.9 trillion total super assets, while retail funds held 20.7% of total assets. The remaining assets were held by small funds, including self-managed super funds (SMSFs) (25.6%), public sector funds (23.6%) and corporate funds (2%).

In terms of performance, the Productivity Commission’s report found that not-for-profit industry funds have “systematically outperformed” retail funds. It also found that 77% of member accounts in underperforming funds were in retail funds, even though retail funds represented just nine of the 29 underperforming funds identified.

The report also found that fees were higher for retail funds than for industry funds. However, as Moneysmart points out, many industry and retail super funds do offer MySuper accounts. These are simple accounts that typically offer lower fees.

When it comes to investments, retail super funds may offer a wider range of investment options compared to some industry funds.

Both industry funds and retail funds typically offer some form of life insurance; however, check with your fund to find out more about the level of cover on offer.



What other types of super funds are there?

As well as industry and retail super funds, other types of super funds include:

  • Corporate super funds – these are funds created by a company for their employees.
  • Public sector super funds – these funds are created for federal or state government employees.
  • Self-managed super funds (SMSFs)SMSFs are private super funds that are managed by individuals. They can have up to four members.

Choosing a super fund

When comparing super funds, whether it is an industry fund or retail fund, it’s important to carefully consider factors such as:

  • Investment performance – consider a fund’s long-term track record or performance and whether it has a history of delivering high returns. Remember that past performance should not be relied on to judge future performance.
  • Fees – compare the super fees you will be charged against other funds and make sure you aren’t paying more than you should be.
  • Investment options – look for a fund that offers investment options suited to your circumstances and the level of risk you are willing to take on.
  • Insurance – if you would like to take out life insurance through your super, consider what cover the fund offers and check the premiums charged.

Learn more about superannuation

Cover image source: gerasimov_foto_174/Shutterstock.com

This article was originally written by Christine Thelander. It was reviewed by our Sub Editor Jacqueline Belesky and Finance & Lifestyle Editor Shay Waraker before it was updated, as part of our fact-checking process.

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