Compare industry super funds

You’ve been comparing and researching superannuation funds, you’ve probably come across industry superannuation funds.

First established in the 1980s, industry super funds were intended to protect Australian workers in certain industries from high fees and commission products most commonly found in retail superannuation funds.

Back in the day, industry super funds were usually only open to members who worked in particular industries. These days, the larger industry super funds are open to anyone. However, there are some smaller industry super funds that are still restricted to employees in specific industries.

Unlike retail super funds, industry super funds don’t pay commissions or incentives to financial planners or financial advisers. Industry funds are not-for-profit organisations and are run to benefit members. As profits go back into the fund, industry super funds tend to have lower management fees than other types of retail (or for-profit) super funds. When it comes to governance, industry super funds are usually governed by trustee boards made up of both employers and employees.

Most industry super funds tend to be accumulation funds. Accumulation-style super works similarly to a regular bank account where the balance of your industry super account is built up by the deposits you make into it.

Funds are accumulated into industry super funds by way of:

• compulsory employer contributions;
• any additional contributions you make;
• spouse contributions, or;
• government co-contributions.

Your super contributions are then invested by your industry super fund into an investment option, either chosen by you, or chosen by your industry super fund as a default investment.

When comparing the benefits and drawbacks of industry super funds, and how they stack up against other types of super funds, like retail or SMSF options, here’s what you need to know:

Pros

• May suit time-poor workers: Industry super funds may suit Australian workers who don’t have the time or resources to manage their own super.
• Often have fewer fees: As industry super funds are non-profit, with profits deposited back into the fund to benefit the members, they tend to have fewer fees than retail funds.
• Simple, no-frills options available: Some industry super funds offer MySuper accounts, which are no-frills options offering lower fees and simple, easy-to-understand features.

Cons

• May have fewer investment options: Industry super funds may have fewer types of investment options than funds offered by other financial institutions. While this may not be an issue for some people, those wanting more flexibility and diversification in their investment strategy might want to also compare either a retail super fund or a SMSF.
• May have hands-off advice and assistance: When it comes to advice, financial services and other ongoing assistance, industry super funds tend to be less hands-on than retail funds. That’s not to say you’ll get no support, though if you’re looking for a super fund that offers more advice and interaction, you may want to also investigate other, more hands-on options.

Because every Australian is in a different financial situation, and has different goals for their superannuation, there is no single ‘best’ industry super fund to suit everybody.

To find the best industry super fund for you, you may want to consider what you want from your superannuation, and keep this in mind when comparing industry funds. Be sure to consider your current financial situation, as well as your plans for the future, before making any decisions.

For example, if you’re just starting your career, you may be interested in an industry super fund with a growth investment option, in order to rapidly build your super. If you’re closer to retirement, you may be more interested in more conservative investment options that let you preserve the nest egg you’ve already built up. Alternatively, you may prefer an industry fund offering an ethical investment option.

Additionally, industry super funds may offer different fees, insurance options, and other services that may be more or less useful to different Australians. Compare different industry super funds before making a decision, and consider seeking professional financial advice.

You can use RateCity’s comparison tables to list industry super funds by their performance over the past five years. This gives you an idea of the fund’s recent returns, to help you work out how much your super balance could have grown with this super fund.

However, it's important to remember that a super fund’s past performance is not a reliable indication of its future performance. Additionally, the best performing industry fund may not be the best industry fund for you, as its fees, features and other benefits may not always suit your unique super requirements.

With so many different super funds on the market, comparing industry super funds and working out which one may suit your needs can be confusing. When comparing industry super funds, here’s what you need to know:

• Investment options: Historically, industry super funds have offered fewer options than other types of super funds, but this has changed in recent years. Some people prefer to pick their own investments, so if you want this flexibility, search for an industry super fund that suits your preference.
• Performance: While past performance is never a reliable indicator of future performance, it can help give you a rough idea of the type of investment returns you might be able to expect from your industry super fund. Compare the past five years of investment performance for different funds to get an idea of where you could potentially stand.
• Fees and charges: Ongoing costs and maintenance fees can add up over the long term. As industry super funds invest profits back into the fund, this generally means that low-cost industry super funds have low fees and/or charge fewer fees than other retail or for-profit funds. With any superannuation fund, compare the fees and charges to the features and benefits, and consider whether the cost of fees will make an impact on your super balance, so you can be confident you’re getting what you pay for.
• Insurance: These days, it’s common for super funds to offer insurance as an option within the fund. When you’re comparing industry super funds, check what insurances are on offer and whether the level of cover stacks up to policies held outside an industry super fund. An advantage of holding insurance within an industry super fund is that policies like life insurance, total and permanent disability (TPD) insurance, and income protection insurance are usually discounted. Also, premiums on insurances offered through an industry super fund are usually deducted from your super account, which can be tax effective in some cases.

• Superannuation is a long-term investment designed to support you well into your retirement. Some people can compare super funds and still feel overwhelmed or uncomfortable deciding which fund works best for them and their financial situation. In that instance, a financial adviser or financial planner may be able to help you narrow down your options and provide financial advice. Before making any decisions, it always pays to do your research, read the product disclosure statement (PDS) and compare your options.