How to compare funds
If you're thinking about choosing your own fund, compare the following features of the funds you're considering:
Fees and costs you'll pay
If you don't keep your fees and costs down, you may have a lot less money to retire on. For example, if your total fees and costs are 2% a year rather than 1% a year, your final benefit at retirement could be significantly less.
When you compare fees, make sure you're comparing funds with similar benefits and investment strategies.
Death and disability benefits and insurance premiums
Insurance can cover you in case you die, become unable to work, or need money during an illness. If you are considering changing funds, first make sure that you will be able to obtain adequate insurance cover in the new fund.
Some funds may have restrictions on obtaining insurance such as requiring you to pass a medical examination or undergo a waiting period before they will cover you. There may also be restrictions for age, dangerous jobs, part-time or casual work, and maternity leave. Some funds make some insurance cover compulsory. Some allow you to opt out and not be charged, while others allow you to opt in at a later point in time.
Decide how much insurance you want and compare the costs, which can vary significantly between different superannuation funds.
Remember that your superannuation fund's insurance may cost you less than insurance you could buy yourself.
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Remember, it may not be possible to get the same automatic cover in your old fund if you leave and re-join later. |
Investment options
Many funds let you select where your superannuation will be invested, with some funds offering more than 10 different investment options. Some options offer higher expected returns, but with a higher risk that investments may go down in value as well as up. Other options offer greater security but with lower expected returns.
Each option will have a strategy explained in the fund documents, which outlines the type of investments it will have, its expected returns, timeframe and possible risks. Select the level of risk and return you're comfortable with.
Investment performance
Your fund's investment performance usually makes a big difference to your eventual retirement payout.
No-one can reliably pick which fund or investment option will perform best. It is better to select a fund and investment option that best suits your needs. Think about how willing you are to seek higher expected returns taking into consideration the additional risks involved.
For more information on investment performance:
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ASIC publishes 5 and 10 year average performance figures for different investment strategies on ASIC's FIDO website and
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Research companies, such as SuperRatings rate super funds and often publish their ratings in newspapers and websites.
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Remember that past performance is no guarantee of future returns. |
Fund features and services
Fund services include help lines or websites for fund members, regular member statements and many other features. Decide which services are important to you and check whether they're offered at a reasonable price.
To compare funds, read the Product Disclosure Statement for each fund you are considering. Contact each fund and ask them to send you a copy.
Source: ASIC's FIDO website