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When it comes to choosing your superannuation fund, there are several different types of funds to select from, and one of the most popular is industry funds.
Industry superannuation funds are the largest fund type by assets under management, holding $927 billion, or 28.%, of all superannuation assets as at the end of June 2021.
The other main type of fund on offer are retail funds, which are generally run by banks and other financial institutions.
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What is an Industry Super Fund?
Industry superannuation funds are run to benefit members and are also called profit-for-member funds. When the superannuation guarantee was introduced, industry finds were among the first to emerge and were originally run for a particular industry or trade. For example, the hospitality industry was long represented by Hostplus, while UniSuper was once the preserve of higher education workers. But as many have grown or merged, the majority now accept members from all industries.
Industry funds include Australia’s largest superannuation fund Australian Super, and other names you might have heard of such as Aware Super, Australian Retirement Trust, and Rest Super.
How do they Differ From Retail Funds?
Industry funds differ from retail superannuation funds in that they are not owned and run by a for-profit organisation, such as a bank or another kind of financial institution.
While no superannuation fund is allowed to run at a profit, and must operate with its members’ best financial interests front of mind, the organisations that run retail funds can outsource to service providers that they own, which do look to make profits.
Who can Join Industry Super Funds?
Anybody can join an industry superannuation fund.
While there still are some funds that cater for particular professions, such as legalsuper for the legal community or Cbus for construction, and workers in those industries may benefit from particular insurance offerings, most funds allow anyone to join if they wish.
What are the Pros of Industry Super Funds?
Because they are run for members, and not for shareholders, industry funds are generally able to charge lower fees. In its report made public in early 2019, the Productivity Commission found that while total fees for administration and investment management, in aggregate, in APRA-regulated superannuation funds had been trending down over the past decade— from 1.3% in 2008 to 1.1% in 2017—fees for industry super funds remain lower than retail super funds.
Industry funds also generally deliver better investment performance for members than retail funds. Super Ratings list of the Top 10 performing superannuation funds over any time period features mostly industry funds and the Productivity Commission’s report found that not-for-profit funds outperformed retail funds on average within most major asset classes over the ten years to 2017.
Industry funds may also offer members specialised insurance coverage. For example, the construction and building union fund Cbus offers members automatic cover for people working in dangerous occupations, including those under 25, which may not be available in other funds that do not account for the dangerous nature of certain construction work.
What Are Some of the Cons?
Sometimes, the range and type of investment options industry funds offer to members may be smaller than that of retail type funds. However, in most large industry funds, members usually have a wide range of investments to choose from and may even be able to choose from a range of shares if they like.
Industry funds have also been criticised in the past for using funds for marketing campaigns or sporting sponsorships that may not appear to have any direct benefits to members. The Your Future Your Super regulation introduced in July 2021 now requires funds to prove how such expenditure is of benefit to members.
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Frequently Asked Questions (FAQs)
How many industry funds are there in Australia?
Following a number of mergers in the industry, there are now 15 industry super funds in Australia.
What is the best industry super fund?
AustralianSuper is the largest industry superannuation fund and is one of the top five performers over the five years, according to SuperRatings. Hostplus is another fund that does well in the performance tables but there is no one best industry fund and you need to choose a fund based on your individual circumstances and stage of life.
How safe are industry super funds?
Like other super funds, industry funds are invested in equity markets and therefore exposed to market volatility, but they also invest in non-listed markets, which can offer some protection. The biggest risk to your superannuation in any fund will be identity fraud, which targets individuals.
What fees do industry super funds charge?
Like other superannuation funds, industry superannuation funds charge administration fees, investment fees and transaction costs.
What industry super fund has the lowest fees?
UniSuper has some of the lowest fees with annual fees of $316 on a balance of $50,000. The Australian Taxation Office Your Super Comparison Tool lets you compare the fees and performance of different superannuation funds.
Who owns industry super funds?
Industry funds were initially started by unions and employer associations, but they do not own them, and members own the funds in them.
