Helping a friend or family member in financial hardship
Mechanical breakdown insurance – why you dont need it
Case study transition to retirement boosting super
Case study transition to retirement part-time work
Claim money from bank accounts and bank dividends
List of banks, building societies and credit unions
List of life insurance companies and friendly societies
There are many types of super fund, each is a bit different. Knowing the different types of fund will make it easier for you to choose a fund. Super funds can be grouped into a number of categories.
Many super funds offer a new type of account called MySuper. MySuper has replaced most existing default accounts offered by super funds. If you dont choose a super fund yourself your employer must pay your employer contributions into a MySuper account.
lower fees (and restrictions on the type of fees you can be charged)
simple features so you dont pay for services you dont need
a single diversified investment option or a lifecycle investment option.
MySuper is only offered foraccumulation funds, not fordefined benefit fundsand does not apply to accounts in pension phase. Retail, industry and corporate funds can all offer MySuper accounts.
There are two ways super funds can manage your investments through MySuper accounts. They will either use a single diversified investment strategy or a lifecycle investment approach.
This is how most MySuper options work. If you do nothing, your money will be put in a standard mix of investments and the risk-reward approach will stay the same for your whole life.
Check with your super fund to find out about their investment approach. It is common for these funds to have a balanced/growth approach to investing with 70% of assets in growth (e.g. shares and property) and 30% in defensive investments (e.g. cash and fixed interest).
Super funds that offer a lifecycle option will move your money from growth investments when youre young to more conservative investments when youre older. The goal is to take on more risk when youre young because you have time to ride the ups and downs of financial markets.Then, as you get older, your super fund will reduce your risk to secure what youve built up over your working life.
You dont have to make any changes yourself with a lifecycle option – your fund automatically changes your investment strategy for you.
This table shows you an example of a typical investment mix with a percentage of your super savings in growthand defensive assets, depending on your age.
If you havent chosen your super fund in the past and you have just gone with the fund your employer selected, your super will have been automatically transferred into a MySuper account.
If you are in adefined benefit fund, or you have invested in certain legacy products, you will not be transferred to a MySuper account. Ask your super fund if you are not sure where you stand or you want more information. If you have already chosen a super investment option within your existing fund you can choose to move to a MySuper option if you want.
To find fund options, search the MySuper funds list.
Contact your super fund to see if MySuper is right for you. Seechoosing a super fundto find out more about your options.
Retail fundsare usually run by banksor investment companies. Anyone can join these funds.
They often have alarge numberof investment options, sometimes in the hundreds.
They are usually recommended byfinancial adviserswho may be paid for their advice by fees and/or acommission(commissions are being phased out).
Most retail funds range from mid to high cost, but some offer a low cost or MySuper alternative.
The company that owns the fund aims to retain some profit.
The larger industry super funds are open for anyone to join. Some others are restricted to employees in a particular industry.
They usually havea smaller number ofinvestment options, which will meet most peoples needs.
Most funds areaccumulation funds, a few older funds still havedefined benefitmembers.
They are generally low to mid cost funds and some offer MySuper accounts.
They are not for profit funds which means profits are put back into the fund for the benefit of all members.
Public sector funds were created for employees of federal and state government departments. Most are only open to government employees.
Some employers contribute more than the 9.5% minimum.
They have a modest range of investment choices that will meet most peoples needs.
Many long-term members havedefined benefits, newer members are usually in anaccumulation fund.
They generally have very low fees and some offer MySuper accounts.
Profits are put back into the fund for the benefit of all members.
A corporate fund isarranged by an employer, for its employees.
Some larger corporate funds have anemployerwho also operates the fund under a board oftrusteesappointed by the employer and employees. Other corporate fundsmay be included as a separate part ofa large retail or industry super fund (especially for small- and medium-sized employers).
Thosemanaged by alarger fund may offer a wider range of investment options.
Some older corporate funds havedefined benefitmembers, most others areaccumulation funds.
They are generally low to mid cost funds for large employers but may be high cost for small employers.
Funds run by the employer or industry fund will usually return all profits to members, while those run by retain funds will retain some profits.
An eligible rollover fund (ERF) is a holding account forlost members or inactive members with low account balances. These fundscannot receive employer contributions.
Just like ordinary super funds, some ERFshave low investment returns and may charge high fees, while others have good returns and low fees.
Some ERF providers will try to find your active super fund asyour money is likely to grow faster if you consolidate your ERF with your active super fund.
These funds are discussed in detail on theself-managed super fund (SMSF)webpage.
Most Australians have their super in an accumulation fund. They are called accumulation funds because your money grows or accumulates over time.
The value of your super depends on the investment option you choose, as well as how much money:
Investment profits are added to your account, and investment losses are taken out.
In an accumulation fundyoubear the risk that your super payout will be lower if financial markets drop.
Never leave a defined benefit fund unless youre very sure you will be better off. Some of these funds are very generous.
Defined benefit funds are less common than accumulation funds. Most defined benefit funds are corporate or public sector funds, andmany are now closed to new members.
The value of your retirement benefit is defined by the fund rules and depends on:
For example, after 25 years membership, your retirement benefit might be worth:
Get professional advice if youre considering changing from a defined benefit fund to an accumulation fund. Once you leave, you cant get back in. Often defined benefit funds are the better option.
In a defined benefit fund your employer or the fundgenerally takes on the investment risk. But be aware that defined benefit funds can be affected by market downturns, and some employers or funds may have difficulty taking on the market risk.
If youre thinking about changing funds, start by working out where you stand now. Different types of funds have different features and drawbacks. Knowing the type of super fund youre in will help you make informed decisions about your super savings.