What is MySuper?

MySuper is designed to be a simple and cost-effective super product offered as a default option by a super fund.

When you start work, if you don’t nominate a preferred super account or your employer can’t establish if you have a stapled super account, then you will be signed up to the MySuper account of the provider preferred by your employer.

It’s to this account your employer will then pay any super contribution, including the Super Guarantee if you’re eligible.

The MySuper reforms were enacted in 2012 following the Federal Government’s Super System Review.

The Moneysmart website, run by the Australian Securities and Investments Commission (ASIC), says MySuper products should typically offer lower fees to other super products, and should have simple features so you don’t end up paying for services you don’t need.

It says the investment option of a MySuper account may be either single diversified, meaning a balanced or growth approach that stays the same throughout your life, or a lifecycle approach that moves from growth investments when you’re young to more conservative investments when you’re older.

What are the fees for MySuper?

The fees you can be charged for a MySuper product are limited by legislation and are mainly restricted to recovering the cost of providing a service.

They include an investment fee, a switching fee, an activity fee and other charges. You should be notified what fees you are charged in a regular statement from your provider.

What insurance cover is available with MySuper?

All MySuper products are required to offer a basic level of life insurance and total and permanent disability (TPD) cover, generally on an opt-out basis. This means you will automatically receive a prescribed level of insurance cover upon joining a fund.

There are some exceptions such as for new members under 25 or those with account balances less than $6,000, for whom it is generally opt-in. There may also be some exceptions for workers in dangerous jobs, depending on the provider.

If you choose to opt out of the insurance, you will no longer be charged an insurance premium cost and will no longer receive the cover.

What should your provider tell you about MySuper?

Your MySuper provider is required to give you access to an online product dashboard that outlines some of the details on how your account is set up and performing.

The dashboard will show you the return target for your MySuper, the returns for previous financial years, and a comparison between the return target and the returns for previous financial years.

It should also show the level of investment risk for your account and a statement of any fees and other costs you’ve been charged.

APRA turns up the heat on MySuper

The Australian Prudential Regulation Authority (APRA) has access to a range of information on how MySuper products perform and any fees or charges. This allows it to make comparisons between the many MySuper products so it can see if any are underperforming based on benchmark figures it sets.

The regulator publishes an online heatmap that allows you to see whether your MySuper product is underperforming or not. If your product is listed as falling, your provider must get in touch to explain what action it is taking to improve performance and what options may be available.

→ Read more: How to check if you’re with one of Australia’s worst-performing super funds

Should you stick with a MySuper account?

Think very carefully before considering a move to another super product or provider. Look at what benefits and options are available to you at the moment and what you may lose or gain long-term if you decide to make any changes.

Read any Product Disclosure Statements (PDS) and Target Market Determination (TMD) documents that apply for super products you are considering. You might want to consider seeking some independent financial advice before taking any action.

While MySuper should help you to grow a retirement nest egg, it’s important you check regularly to see if this is your best option. You may find you could be in a better position with a different investment option with your current provider, or there may be a better option with another provider. You can compare super funds with Canstar to help you with your decision-making.

Some of questions you could ask your current provider include:

• Where is your superannuation invested? Is it the best option for you?
• What insurance cover do you have – and what do you need?
• Should you be taking advantage of tax-effective superannuation contribution strategies?

An active interest in your super now can lead to a significantly better retirement outcome down the track.

There are plenty of super products out there, and you can use the Australian Taxation Office’s online YourSuper comparison tool to see how various MySuper products stack up against each other. You can also check Canstar’s super Star Ratings and Awards.

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Cover image source: Hyejin Kang/Shutterstock.com