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In Australia, the default superannuation funds system is referred to as ‘MySuper’, and emerged from the Gillard Labor government’s Stronger Super reforms more than a decade ago.
The Stronger Super reforms aimed to strengthen the superannuation industry for Australians by replacing the previous default funds system—which included a wide range of under-performing funds—with a modernised one, using low-cost and simple superannuation products, now known as MySuper products.
These products are designed as the default option for employees, and are where the majority of Australians park their super contributions.
Since January 1, 2014, only superannuation funds offering a MySuper product have been eligible to receive the default and compulsory superannuation contributions for new employees (unless an employee has specified another investment option).
Members can choose a particular MySuper product to nominate as their fund, and can also opt out of the MySuper option at any time if they wish to use a different investment option.
Here’s what MySuper products entail, how you can find the best superannuation product to suit your needs, and what to do if you need to change funds.
What Is A MySuper Product?
MySuper came into effect in 2012 as a way to provide simple, cost-effective and balanced superannuation products for the vast majority of Australian workers who choose to invest in the default option of a superannuation fund.
Typically, MySuper products offer lower fees than other investment options, simple features (meaning you don’t need to pay for services you won’t use), and either a ‘single diversified’ or ‘lifecycle’ investment option’.
Most MySuper accounts are set up as a single diversified option, meaning your fund puts your money into a standard mix of investments. This approach stays the same for your whole membership, with these funds usually having a balanced or growth approach.
Lifecycle investment options, on the other hand, involves your fund typically moving your money from growth investments when you’re young to more conservative investments when you’re older: i.e.: moving your investments with your lifecycle.
Remember: you don’t have to opt for a MySuper product. Super funds offer other choices (often known as choice products) which give you a more active role in your superannuation and investments, if you wish.
Related: List Of Super Funds In Australia
MySuper Comparison
According to the Productivity Commission, being in an underperforming MySuper product can leave a typical new workforce entrant $375,000 worse off by retirement age.
A large proportion of Australians are members of a MySuper fund, with approximately 27% of all super assets ($887 billion) invested across almost 14 million MySuper accounts, Superguide reported. This is close to 60% of all super accounts.
So, if you are one of the many Australians with a MySuper product, you may wonder if you’ve made the right choice. As the intention of the MySuper system is to offer a range of easily comparable, relatively simple products, it is worth knowing how to compare your product to the wider market and see if you are falling behind in an underperforming fund.
Since the establishment of the MySuper system, the competition focus has shifted towards net costs and returns, with the Australian Prudential Regulation Authority (APRA) periodically publishing fee tables and other statistics.
APRA also conducts an annual performance test of all MySuper products and, if you are a member of a MySuper product that has been found to be underperforming from this test, the fund is obligated to inform you and all other members. If a product underperforms for two years in a row, then no new members can be accepted into the fund.
To compare super funds, you can use the ATO’s YourSuper comparison tool, which is an online list comparing MySuper products. It’s also recommended that you read through the product disclosure statement for each product offered by a fund to make sure it’s the right fit for you.
Alternatively, you can read our analysis and picks for the best default superannuation funds for Australians in 2023.
Should I Change Super Funds?
If you use the ATO’s YourSuper comparison tool and find your MySuper product is underperforming compared to the market, you may wish to change to a different super fund.
It’s important to note, however, that past performance is not necessarily a reliable indicator of future performance and that returns are just one piece of the pie that you should consider with your comparison.
Other things to consider are the fees, the type of investments the fund invests in (such as whether it invests in an environmentally-friendly manner or if it supports big tobacco), and any other benefits you may receive, such as insurance.
If you decide that it is best to make the switch, you can find out how to do so step-by-step by reading our guide on how to change super funds here.
Frequently Asked Questions (FAQs)
What is the difference between MySuper and choice super?
MySuper is the default product for a superfund, meaning it is their most simple, cost-effective product. It is largely hands-off for members, so the fund takes care of your investments for you over your working career.
Choice super products, on the other hand, are products that the members are more involved in: whether due to investment choices or because of the additional features, such as TPD insurance. These products aren’t the default choice, and are instead products you have to actively choose.
How can you get $10,000 out of your super?
You can make withdrawals from your super once you reach retirement or your preservation age, whichever comes first.
Related: What Age Can You Access Super?
There are other ways you can withdraw early from your super, such as due to medical needs or financial hardship; however, these involve application processes–you cannot just withdraw super because you wish to. There are also harsh penalties for withdrawing super early on illegal or dishonest means.
For more information about the early release of super, read our guide here.
Which MySuper product is the best?
According to our research and analysis, AustralianSuper is among the best performing MySuper product thanks to its high average yearly return over ten years of 8.42%. With an annual administration fee of $382, it is quite cost-efficient compared with other super funds.
Additionally, AustralianSuper is recognised in the industry as a responsible investment fund, provides insurance such as death cover to members, and allows for the option to add personalised investment advice.
However, there are other high-performing funds that may suit you better, such as Hostplus, Aware Super, UniSuper and Hesta, among others. Do your research to find the right fund for you.
Read our review of the AustralianSuper superannuation product here.
