How to Choose a Superannuation Fund for Success

Most employed people in Australia can select their choice of superannuation fund. This comes from the Australian Taxation Office’s superannuation standard choice form, which you will need to complete when starting a new position.

Whether you choose to stay with an existing fund, a default fund set by the employer, or an entirely new one, it’s crucial to understand your choices and select a fund that matches your needs.

So, how do you choose a super fund? Let’s dive into key elements like fund performance, fees, return on investment (ROI), insurance offerings, and more.

What super fund should I choose?

There is a huge range of super funds out there and even more super investment options. The question is… “what super should I choose?”

When selecting a super fund, the best place to start is with your priorities. What about the fund matters most to you?

• Excellent performance history
• Good investment options within the fund
• Low fees and insurance options
• Special services, e.g. rolling over past super for you.

Making the right choice on your superannuation fund is part of a good long-term investment strategy, so it’s important to consider what means the most to you. Let’s break down each of the dot points above.

What kind of performance history does the super fund have?

Look at the past 5-10 years of your superannuation fund’s performance. Compare growth among competitors and look for the best contender (or a balanced option). Weigh up the fund’s performance and take into account associated fees and costs.

What kind of investment options will I get from the super fund?

Super funds offer various investment options including cash, conservative, defensive, balanced, high growth/aggressive, ethical, or the MySuper option. Depending on the super fund, you may even be able to control what kind of weighting you would like to place on direct investments or asset types.

What kind of fees does the super fund charge?

Superannuation funds typically charge fees based on their offerings and the services they provide you. These fees are usually charged monthly or after changing investments and come in the form of a percentage or dollar amount.

It’s important to take into account the management expense ratio (MER) or indirect cost ratio (ICR), which represent internal costs not visible in your transactions but are expenses incurred when investing in a specific investment option. Speak to your financial adviser about the best way to go about this.

What insurance does the superannuation fund give?

Usually, superannuation funds hold three different types of insurance inside the fund:

• Life Insurance
• Total and Permanent Disability Insurance
• Income Protection/Salary Continuance.

Like any other insurance policy, you should consider what premium rates are charged, the amount of coverage you are given, and if you are affected by any exclusions.

Does the superannuation fund offer any other services?

Different super funds offer different services (and sometimes more associated fees). Services can be anything from special rollover assistance from your old fund to your existing fund, special financial advice or splitting your super for personal reasons. The services are varied, and one service may really stand out to you in your specific situation. Consider what each superannuation fund offers as part of its package and make a choice based on your individual needs.

The best way to access information about each super fund is through their product disclosure statements. The ATO also offers a super comparison tool that compares MySuper products, and there are many other online comparison websites for super funds in Australia.

Our team can help you find the best superannuation fund for success

Be sure to chat with your financial adviser about your superannuation fund and ensure that you are in the right fund that meets your needs and investment objectives.

For guidance on how to choose a superannuation fund, contact Elliot Watson Financial Planning at 02 4038 1623 or complete our contact form.

The information within, including tax, does not consider your personal circumstances and is general advice only. It has been prepared without taking into account any of your individual objectives, financial solutions or needs. Before acting on this information, you should consider its appropriateness regarding your objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.
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