Choosing a good super fund

Choosing a good super fund is easy if you know what to look for.

You've started your first job and your employer needs to know what super fund to send your compulsory contributions to. You've been in the workforce for a while but you are worried your superannuation account balance isn't growing as fast it should be because you fear the investment returns have been too low. You want to set up a new super fund account separate to one your employer has put you into.

Whether you are choosing your first super fund or choosing a new one to swap into, the challenges are the same - what should you look out for, and how do you check it's a good fund?

To make the right choice it helps to know the four core elements of a super fund. Good super funds are ones that do each of these better than average and better than their peers. See the following table.

THE FOUR CORE ELEMENTS OF EVERY SUPER FUND
  • Investment menu: It has a good number of choices for how you want your superannuation savings invested
  • Fees: It charges only reasonable fees. When comparing fees make sure you compare all the fees, i.e. entry fees, administration fees, members fees and all investment fees and costs.
  • Insurance: Most super funds offer death, total and permanent disability (TPD) and income protection insurance cover. If you want this insurance cover you need to check whether its adequate and fairly priced
  • Extra features: Most super funds provide a broad range of extra features and services that will help you manage your superannuation savings, plan and prepare for your retirement, and monitor how your super fund is going. Above all, your super fund should be easy to deal with.
FIVE SIGNS OF A GOOD SUPERANNUATION FUND
  1. You trust the organisation and the people who run the fund and its superannuation products.
  2. The investment options you intend using achieve above average investment returns over the medium term, eg., over three or five years.
  3. It charges good value fees. Super funds charge average fees of around 1% pa or less.
  4. It offers value for money insurance, and the types of insurances you need. These may include a combination of death, TPD and income protection cover.
  5. It has a wide range of extra features and services, and is easy to deal with.

Narrowing down your choices
To help narrow down your choices of super funds follow these five easy steps

Step 1 - Choices and flexibility

Do you want a simple easy-to-understand super fund or one more complex? Do you want lots of investment choices? Do you want the fund to make the investment decisions or do you want to? Do you want the fund to consider environmental and social impact factors about the companies it invests in, do you want to invest in technology, exclude tobacco companies? Do you want your fund to regularly disclose what its investments are?

Do you want insurance, what type and how much? Do you want to be able to access your account on your mobile device? Do you want your fund to have webchat? Do you want advice with that or do you want to talk to a financial adviser? Do you want to be able to bundle extras like home loans, health insurance or shopping discounts?

These matter because the more features you want, the higher the price in fees and the higher your superannuation fund's investment returns need to be to cover the fees. Put another way, if you want lots of involvement with your super fund and you want it to be flexible then look for funds with lots of investment and insurance choices. But be prepared to pay higher fees.

Step 2 - Kick the tyres

Check out their websites, read their official documents, such as their Product Disclosure Statement, phone or email them, contact them through webchat or send them a social media message to see if they respond.

Step 3 - It's all in the investment menu

Check out their websites, read their official documents, such as their Product Disclosure Statement, phone or email them, contact them through webchat or send them a social media message to see if they respond.

Step 4 - Is the fund AAA rated?

Step 5 - Ask questions
If you've narrowed your choices down to just a few funds and you want to compare them in detail, why not ask the SelectingSuper team to produce a Member Report Card for you?

 Super Choice ChecklistMySuper and Choice Funds