Let’s help you to compare super funds

What is superannuation? 

Superannuation is a way of saving money for your retirement. When you work, a percentage of your earnings is set aside in a super fund account, which is only made accessible to you when you retire and reach your preservation age.  This amount can grow over time, based on how much is contributed and how your chosen fund invests your money. 

Superannuation is a long term investment, but it shouldn’t be thought of as a set and forget decision. The fees you pay, the investment returns, and asset allocation will determine how much super you will have at the time of retirement and the kind of retirement you’ll be able to financially enjoy. Engaging with your super at all stages of your life is important.

How does superannuation work? 

Superannuation is the way that most Australians save for their retirement. Employers are required to pay a percentage of your earnings (current minimum 11%) in your super account and your chosen superfund will invest this on your behalf until your retirement.

When you retire you will be able to withdraw the funds in your account to pay for your living expenses. 

You can choose which type of superfund your money is held by and you will generally also get a choice between the investment options made with your money as most superfunds will have options for conservative, balanced or growth investments.

Main types of super funds

There are a range of super funds choices available to Australians including:

• Retail super funds -usually run by banks or investment companies and profits are returned to their shareholders.  
• Industry super funds - not-for-profit funds and return profits to their members.  
• Self Managed Super Funds (SMSF) - is a private super fund that you manage yourself.
• Ethical super funds - seek to invest in areas and companies that have social or environmental priorities.

Common investment options of superannuation funds in Australia 

When it comes to selecting the investment options within your chosen fund you’re likely to have a few options. Which investment option is best for you will depend on a couple of factors such as:

• How long you’ll be investing for.
• How hands on you’ll want to be, and 
• Your risk tolerance.

Some of the most common types of pre-mixed options offered by super funds include:

• Conservative: With this type of investment mix you’ll usually have a high portion in fixed interest and cash (up to 70%), with a smaller proportion towards shares and or property (up to 30%).
• Balanced: This will usually include a high proportion of shares or property (up to 70%) and a smaller percentage of fixed interest and cash (up to 30%).
• Growth: Around 85% of the investments will be in shares or property, while the remainder will be in cash and fixed interest.