Comparing super funds

A common concern to arise when managing your super is knowing what a good super fund looks like and how individuals can assess whether a super fund is up to their standards.

Most superannuation rating agencies in Australia evaluate super funds against criteria such as investment performance; investment options; fees; insurance; and extra services like access to other financial services.

However, a super fund’s investment performance and level of fees are two of the most important factors when considering a super fund. Insurance cover is also important too, especially for those who have health issues or difficulty obtaining life insurance outside their super fund.

To help out, here are fives steps to follow when comparing super funds:

Take a look at what the superannuation ratings agencies say
Knowing what a superannuation ratings agency is saying about a super fund can be a useful guide to singling out the high performers in the market. It also means individuals can compare super funds they are already thinking of joining, against funds that rate highly.

Get some product disclosure statements (PDS)
Every super fund must provide an individual with a product disclosure statement (PDS) before they join the fund. Each PDS comes with a summary page that lists the main fees that the fund charges, the investment choices available and insurance cost options.

Check long-term investment performance
To check a fund’s long-term investment performance, ask questions to find out how other superannuation investments of a similar type are performing and if your investment choice is performing better or worse than the industry average.

Know what fees you will pay
Not-for-profit funds usually charge lower fees since they don’t have to factor in profits for shareholders. Retail funds usually charge higher fees because a member may also have to pay for financial advice and the organisation running the fund also has to make a profit. Some super funds run for profit are called wholesale funds. While the fees on these types of funds can be competitive, unfortunately, people can’t normally join these funds as individuals but can only access these funds via their employer.

Investigate your insurance cover
Those who joined a super fund via their employer often get a better price on insurance and usually don’t have to take a medical to get basic cover. Joining a super fund as an individual means individuals may not be able to access the competitive wholesale rates for insurance. Those with pre-existing health conditions may even be rejected for insurance cover.