Superannuation is Australia’s retirement savings system, allowing all workers to access savings built from their income once they have left the workforce. These savings start building as soon as Australians begin working, whether on a part-time or full-time basis, and continue to grow across their working life.
By law, employers are required to pay a percentage of an adult worker’s pay into the employee’s chosen superannuation account each pay check. Currently, the superannuation guarantee sits at 11% of an employee’s salary. The super fund then invests the money into various financial streams, aiming to provide the employee with returns that will increase their super balance come retirement time.
Once an employee retires, they can access their super fund account, which–for most Australians–would have grown over decades due to these regular contributions and returns.
Clearly, superannuation is an important part of life, which is why finding the superannuation provider that suits you is paramount. Don’t be scared off from constantly reviewing and comparing different superannuation providers and investment options, either. You can change or consolidate your superannuation funds at any time, which–while it may sound daunting–is actually a relatively simple process.
Related: Should You Switch Super Funds?
When choosing a superannuation fund, many Australians simply opt for the default retirement product of the super fund. This is known as the MySuper product, and is the standard financial vehicle that workers will be placed into by their employer unless they elect otherwise. They are generally the low-frills option and have lower fees as they are not offering a suite of complex services but chasing a more ‘balanced’ investment profile.
Not everyone will be content with a default MySuper product. For example, some workers, especially younger workers with time on their side, may take a more aggressive approach to their super and opt for their chosen fund’s ‘high-growth’ product, which is usually heavily exposed to the share market. Others, perhaps those with fewer working years left before retirement, will play it safe with a more conservative product.
For this analysis, Forbes Advisor has solely focused on the superannuation providers’ default MySuper products.
Note: The below list represents a selection of our top category picks, as chosen by Forbes Advisor Australia’s editors and journalists. The information provided is purely factual and is not intended to imply any recommendation, opinion, or advice about a financial product. Not every product or provider in the marketplace has been reviewed, and the list below is not intended to be exhaustive nor replace your own research or independent financial advice. For more information on how Forbes Advisor ranks and reviews products, including how we identified our top category picks, read the methodology selection below.
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Superannuation is vital for all Australian employees, as it is the key to setting up your life for retirement. To do so, you need to have a good superannuation fund: one that not only offers you high returns, but also supports you throughout your retirement planning.
In 2018, The Productivity Commission released a report, Superannuation: Assessing Efficiency and Competitiveness which found that: “While some funds consistently achieve high net returns, a significant number of products underperform, even after adjusting for differences in investment strategy. Under-performers span both default and choice, and most (but not all) affected members are in retail funds.” The impact is significant: being in an underperforming MySuper product can mean a young worker retires with $375,000 less than an employee in a high-performing MySuper fund.
We used a rigorous methodology to compare superfunds in Australia for consumers, so that you could take the guesswork out of it. Our methodology included comparing 19 of the most populated MySuper products from superannuation funds across the nation.
Forbes Advisor then compared a dataset of eight different data points, being:
This data was predominately sourced via the ATO website, which compares all MySuper products in Australia for ease of consumers.
Alongside this data set, Forbes Advisor conducted additional research via company websites and communications to establish the best-of ranking. Of the 19 different MySuper products compared, nine were then shortlisted as the best performing across the dataset.
Those nine all received three or more stars out of five from Forbes Advisor, and make up the best-of ranking as seen above.
About Star Rankings
You will note that we have included a star rating next to each product or provider. This rating was determined by the editorial team once all of the data points above were considered, and the pros and cons of each product attribute was reviewed. The star rating is solely the view of Forbes Advisor editorial staff. Commercial partners or advertisers have no bearing on the star rating or their inclusion on this list. Star ratings are only one factor to be considered, and Forbes Advisor encourages you to seek independent advice from an authorised financial adviser in relation to your own financial circumstances and investments before you decide to choose a particular financial product or service.
MySuper came about thanks to a legislation change in 2012, allowing default superannuation products by superannuation providers to fall under the one category of ‘MySuper’ products.
It was first introduced as part of the federal government’s 2011 ‘Stronger Super’ reforms, where the then-Gillard Labor government intended to provide a simple, cost-effective, balanced product for the vast majority of Australian workers invested in the default option of their current fund.
Since January 1, 2014, employers have been required to pay all compulsory contributions into approved MySuper accounts for their employees–unless an employee has chosen another investment option. Superannuation funds then had until July 1, 2017 to move existing default members into a complying MySuper product, with many funds choosing to convert their existing default product into a MySuper offering.
As MySuper exists to provide Australians with an easily comparable product, an annual performance test is conducted by super industry watchdog APRA, which includes publishing fee tables and other performance-related statistics.
If you have a MySuper product, your super fund is obliged to let you know if it has performed badly following the APRA test, ASIC’s Moneysmart website explains.
When looking at superannuation funds, it is worth considering what type of fund the superannuation provider is–as there are a number of different types. The most common for public funds are industry funds and retail funds.
Industry superannuation funds are profit-for-member funds, meaning profits go to members and not shareholders. Industry super funds often have lower fees, according to the Productivity Commission’s Inquiry into Superannuation, have generated higher net returns than retail funds.
While industry funds initially began to serve specific industries’ employees–such as for the hospital sector or tertiary education workers–many have since opened their memberships to all Australians.
Conversely, retail super funds are usually owned and run by financial institutions, such as banks–meaning they can outsource some components of the fund to service providers that they own, which run at a profit.
While fees charged by retail funds have fallen over the years, they still remain higher than those charged by industry funds, according to the Productivity Commission’s report.
Public sector funds are superannuation funds run for government employees, and are usually restricted to people working in the public sector–occasionally also including their spouses or families.
Some larger companies and employers have their own superannuation fund they run for employees. Some companies appoint their own board of trustees and run and manage the fund themselves, while others will outsource the running of the fund to another superannuation fund.
You can also decide to manage your super yourself within a self-managed super fund. To do so you generally need to become a trustee and have to adhere to the same superannuation rules and regulations as a large superannuation fund.
While SMSFs provide you more autonomy over investment choices, they are time consuming and most effective at balances of over $200,000.
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Often, members change super funds after becoming aware of a fund’s low performance–or are even urged to switch away from a low-performing fund by APRA itself.
But underperformance isn’t the only factor affecting an individual’s choice to change their fund. People may decide to switch funds for myriad reasons, including finding a more ethical fund, a fund that allows for salary sacrificing, a fund with better customer service and more.
This is why it is important to regularly review your super fund and product choice to make sure you are putting yourself in the best position for your retirement.
At present, October research from SuperRatings estimates super funds will post negative investment performance for the third consecutive month, with the median balanced option expected to post a return of -1.6% for the month of October.
“We have observed continued uncertainty around global markets and inflation, which has weighed on returns from shares,” commented Kirby Rappell, Executive Director of SuperRatings.
However, Rappell says that despite the uncertainty of the past quarter, returns have remained positive over the past 1-20 years for many MySuper products.
“Superfunds continue to display strong capabilities in navigating uncertain market environments and members have been experiencing increased levels of ups and downs for some time now” Rappell said in a statement.
“Our message to members remains one of focusing on the long term and sticking with their long-term investment strategy. The ups and downs are likely to continue, and members who are thinking about changing their strategy are encouraged to contact their fund, or speak with a trusted adviser, before making any changes.”
Data research by Mia Dunn.
The superannuation guarantee is the percentage amount of your salary that all employers are required to pay into your superannuation fund to fund your retirement. It currently sits at 11%.
There is no exact figure of how much someone should have in their superannuation fund upon retirement, as an individual’s needs vary depending on different circumstances such as age and the lifestyle they are accustomed to.
Government website Moneysmart says as a general rule, you should aim to have two-thirds (67%) of your pre-retirement income per year to maintain the same standard of living in retirement.
Yes, you can. While superannuation isn’t generally considered part of your estate upon passing, many superannuation funds allow you to nominate a beneficiary–someone you would like your super balance to be paid to when you die.
