What is MySuper?

MySuper is a superannuation initiative by the Australian Government that resulted in simple and cost-effective default superannuation products for Australian workers. The default products were designed as basic funds without unnecessary features and fees. Employees who have not selected a super fund are assigned a default MySuper product.

Unsure about what type of super fund to use? The comparison table below displays a snapshot of superannuation funds rated by Canstar. Results shown below are based on an average super balance of $80,000 and are sorted by star ratings (highest to lowest).

Annual cost includes administration fees and indirect costs (including the investment fee, performance fee where applicable, and any other indirect management costs). Total cost is calculated based on the average super balance specified, based on the investment option considered within the Canstar Superannuation Star Ratings, 2016. Star Ratings displayed relate to the Starter consumer profile.

Key facts about MySuper

The aim of MySuper products is to provide workers with a cost-effective super fund that has the basic features they need. Some key things to know about MySuper include:

MySuper fees

The fees that can be charged to a member of a MySuper product are limited, with many restricted to recovering the cost of providing the service. The main fees that will apply include:

• Administration fee
• Investment fee
• Other fees – such as investment switching, exit fees and contribution splitting (these fees are limited to the cost of providing the service).

Insurance and MySuper

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

If a member chooses to opt out of the insurance, they will no longer be charged an insurance premium cost or receive the cover.

MySuper investment options

MySuper products offer only one investment option. For many funds, this is simply their current ‘balanced’ fund offering. Funds can, however, apply to use a ‘life stages’ investment strategy as their MySuper investment option. To find out what these investment options really mean, read our explanation here.

As for how those MySuper investment options perform over time, read this article.

Disclosure required for MySuper

The level of Trustee disclosure required in relation to fees, investment performance and investment allocation is higher for MySuper funds than previously required for pre-2013 default super funds. This enables the Australian Prudential Regulation Authority (APRA) to publish easily comparable data on long-term net returns and will make it easier for workers to compare funds.

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You can read more about the development and introduction of MySuper on the government’s Stronger Super website. APRA also has a list of frequently asked MySuper questions.

Importantly, though, while MySuper should help to better protect the retirement nest eggs of Australian workers overall, the best way to look after your own nest egg is to take an active interest! Some questions that investors should regularly ask include:

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

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

MySuper History

In mid-2009, the Rudd government commissioned a review into the operation and efficiency of the superannuation system in Australia. The Super System Review, chaired by Jeremy Cooper, handed its final report to the Gillard government in mid-2010. MySuper was delivered in 2013 as a result of that review.

From 1 January 2014, employers were required to choose a MySuper product as their default super fund. Eligible Australian workers who receive Superannuation Guarantee (SG) contributions from their employer but do not nominate a preferred superannuation fund for contributions to be directed into, will have the payments made into a default MySuper fund chosen by their employer.

Wondering if Australia has viable alternatives to default super funds? Read more about it here.

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List of MySuper Entities and Products

So – which superannuation funds hold a MySuper authority? Currently, there are over 110 MySuper products; the list is as follows:

Source: APRA. List correct at November, 2017.

There are plenty of superannuation funds out there, particularly for investors who take an active interest in their nest egg. For those who prefer not to think about their super funds, this Government initiative means default MySuper products are required to have comparatively low fees and life insurance cover. You can find out more about the attributes of MySuper products here.

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