Ask LH: Which Super Fund Should I Join?

I'm 21 and I want to open a superannuation fund that will give me the best benefits and security, rather than letting each of my employers start new super funds for me. What should I be looking for - no fees or more interest? Which company has the best superannuation scheme? Cheers, The Industrious Mouse

Currency picture from Shutterstock

Dear IM,

Super schemes can vary widely in terms of a number of variables it's worth taking into consideration, although at 21 you've got a relatively long career path ahead of you, which means you've got potentially more time to accrue Super and, when and if it happens, take any interest or revenue hits along the way.

There's no absolute one-size-fits-all "best" scheme, and depending on your actual work circumstances you may end up in a career path where an industrial award points to a specific scheme you have to partake in. There's also no shortage of sites that will offer comparisons of the fee structures of differing schemes out there that you could plug a few figures into — you could check Canstar, Morningstar, Finder or RateCity for example.

If you've got the choice, there's really no reason not to shop around. It's also worth checking for other benefits that a given fund may or may not offer, especially as they relate to insurance products. ASIC's Moneysmart portal has some great general advice when it comes to properly comparing superannuation products which is well worth your time to read.

In a broader context without specifically naming a "best" fund, I'd strongly argue that lower fees were a generally better bet than a predicted rate of return, because for most accumulation style funds, it's possible for investments to turn sour and cost you more over the longer term. Again, that's a function of how risk averse you are. At 21, as noted, you've got a bit of time to play with risk in terms of your longer-scale superannuation profile.

Cheers Lifehacker

Have a question you want to put to Ask Lifehacker? Send it using our contact form.


Comments

    The Industrious Mouse,
    I've been using Sunsuper for years and I've found them pretty good. I would recommend them as one to investigate.

    Don't forget to check the industry funds, if you're in a field that has one. Often have lower fees and several are extremely good. I was very lucky to have worked as a tutor while in my final year at University, which let me get a UniSuper fund started which I have continued to use as my main fund since then as they're very good.

    I like ING's Living Super because it provides you the most control I could find barring the cost and complexity of a SMSF. it allows you to allocate specific percentages to broad areas like stocks, bonds and property for international or domestic. You can also invest in specific stocks but that adds an additional cost.

    Definitely an industtry fund. I'm in REST. Haven't worked in retail for years, but kept the same super fund, haven't switch to the employer's fund at new jobs

    Another vote in favour of industry super funds. The mildly irritating adverts on TV at least seem to be pretty accurate - you do end up with a bit more money that the commercial ones.

    I wish there was a super fund that would straight out invest in the index. This would slash management fees further.

    Before starting a new job check if they're exempt from sections of the Superannuation Act. Just switched jobs and my new employer requires all employees to be in one super fund, incredibly frustrating! However, they are paying 17% super...

    I work within the financial advice sector and I cannot highly recommend that you discuss this with an financial adviser. The choice out there in relation to superannuation products is far and wide, but you need advice to ensure that you are getting a product (as well as the underlying investment options) suitable to your needs and goals.

    Most financial advisers will usually offer a free consultation to discuss your situation with you (and you can find one in your area - http://fpa.com.au/find-a-planner/).

    You can go for the 'industry' super fund, which may offer you a cheaper solution but may not perform as well as ones that charge a higher fee; Ultimately it all boils down industry funds placing your investment into a index based option (and therefore cheaper to manage) in comparison to an active manager (more expensive) who adjust the asset mix to suit market conditions.... Fees vs. Performance.

    Ultimately, I don't want to put you off but the people who have said 'industry funds' above... though this may suit them and their situation, yours may be entirely different.

      Daveb, that's not true. Industry funds vary in their approach to management, but none of them is using solely index-based options. That's more or less what the retail MySuper options do, while still charging higher fees than can possibly be justified. Over almost all time periods, industry funds have out-performed retail funds, not just had lower fees. And if you see a financial adviser, you're liable to end up with advice based on the commissions and bonuses they're being paid, not on your best interests. Unless of course you find one (generally associated with an industry fund) who doesn't get paid any commissions or bonuses. As the Herald Sun reported just this week http://www.heraldsun.com.au/news/financial-advisers-recommending-retail-super-fund-despite-reforms/story-e6frf7jo-1227435832008

      Industry funds don't simply use the index. Generally, they out perform the retail funds because of the lower admin costs. The other options aren't particularly complex, particularly for a young person. I think a free consultation usually leads to recommendation of more time (charged) or products bringing the advisor commission.

    Most super funds offer index investing now. First State Super for example offers the usual growth and balanced options but also offers access to index options for Aussie and international shares and bonds etc. the costs of these index options are extremely low.

    Davebs advice shows clearly why you should avoid financial advisors. He lied to you with his info about industry funds and failed to declare that he would be getting kickbacks from the retail super funds. Avoid them and go with an industry fund

Join the discussion!

Trending Stories Right Now