Choosing a super fund: 5 things to look out for 

Choosing a super fund: 5 things to look out for 

By Finder


Not all super funds are the same, and the fund you choose will make a big impact on how much money you have at retirement.

If you’re choosing your first super fund, or perhaps choosing a new fund to switch to, here are 5 things to look out for.


What risk level do you want?

Super funds offer a range of different super products based on varying levels of investment risk. Most super funds will offer a default product option (this is called the MySuper option) that is designed to suit the majority of members of different ages, life stages and risk appetites. This is where you’ll be invested when you first join the fund unless you choose otherwise.

Most super funds also offer a high-growth option, a conservative option, and a balanced option that you can choose if you’re looking for more risk, less risk or somewhere in between. The amount of risk you want to take on is a personal choice; however, it’s generally advised that you invest in higher growth options when you’re young and switch to a balanced then conservative option as you get closer to retirement.


How do you want your money invested?

The way you want your money invested will also impact your fund’s level of risk. For example, if you want your super invested almost entirely in shares, this would be a high-growth option.

You can also have some control over the types of companies your super fund invests your money in. For example, if you don’t want your super invested in companies that produce large amounts of fossil fuels, ethical super funds avoid investments in fossil fuels and coal. Similarly, some ethical funds have no investments in industries like tobacco, gambling, and weapon manufacturing.


How much are the fees?

When comparing super funds, one major comparison point is the annual fees and charges. The higher the fees, the less money you’ll have in your account at the end of the year. It might not seem like a big difference now, but if you’re paying an extra $100 in fees, you could end up retiring with tens of thousands of dollars less.

As a general rule of thumb, try to aim for annual fees that are less than 1% of your balance. For example, if your super balance is $30,000, try to aim for a fund that charges $300 or less for the year.


How has the fund performed over time?

Super funds are like giant investment portfolios in your name, so you want them to be delivering good returns each year. Super funds list their performance figures publicly on their website, and you can also find their performance by using a comparison website or tool.

When looking at the performance figures, make sure to look at the long-term performance, not just the past year. It’s more important to know a fund has consistently performed well over time rather than just had a particularly good year.

Looking at the 10-year performance returns will give you a good indication of how the fund has been doing over time. Some of the best default super products have returned around 8 to 9% p.a. over the past 10 years.


Does the fund offer a lot of choice?

Some super funds offer upwards of 20 different investment options to choose between, while others only offer one or two options. Going with the latter is completely fine if you know what type of product you’re looking for and are confident you won’t want to switch investment options too often later in life.

But if you want to have the option of jumping between, say, a high-growth option and a balanced option, then look for a fund that offers a lot of choice with this.

Claims made easier.
Claims resolved faster.