If you have multiple super funds, you may be able to save on fees by consolidating your accounts into one. Even small differences in fees and investment performance can have a substantial impact on your retirement savings. Choosing the right super fund is about more than just selecting the one with the lowest fees. You want to make sure the fund you choose is suited to your needs and gives you value for money.
To help you when comparing funds, we've summarised below some of the key things that you may want to consider. This is by no means a complete list, but it gives you an indication of what to look for.
| Things to compare | What to consider |
| Fees | Generally, the lower the better but think 'value for money' not just 'lowest cost'. Fees payable also change as you change jobs as you transfer to alternative fee arrangements. You should always consider your options. |
| Investment options | Ensure there are options available that suit your needs and offer a level of risk you're comfortable with. |
| Investment performance | Super is a long-term investment. Consider the performance of the investment options over the longer term but remember that past performance isn't necessarily an indicator of future performance. |
| Insurance | Understand what cover you have now and what cover may be available in the funds you are considering. Also understand the cost of your cover. |
| Service | Think about which super fund you feel can offer the type and level of service you want, at a cost that is acceptable. |
| Other features | Defined benefit funds, public sector or constitutionally protected funds are particularly complex and offer unique features that may be beneficial to retain. It is strongly recommended that you seek personal advice if you are in these types of funds. |
When choosing investment options, you should think about how long your money will be invested and the level of risk and return you are comfortable with. More conservative options generally offer lower risk and less volatility over the short-term, but they usually have lower returns over the longer term. Higher growth options will have higher risk and more volatile returns over the short term but will usually achieve higher returns over the long term.
Your super fund may include certain insurance benefits, including:
Insurance terms and definitions vary between providers, ensure that you understand key differences between the policies. If you have a pre-existing medical condition, you should check if your existing policy provides cover for this and whether you may lose this by changing your super fund.
The amount of the cover you have may be fixed or could be calculated based on a formula related to age or salary. If cover is based on a formula, ensure that you understand how your cover will change over time.
The insurer will pay a TPD benefit in respect of you, if in the insurer's opinion, you are totally and permanently disabled. The total TPD sum insured held by you cannot exceed the death sum insured.
You may have the option to retain your existing Death and TPD insurances in addition to obtaining insurance offered by your new fund. This may provide you with valuable additional cover, but of course this will mean your overall premiums will be higher.
To calculate how much cover you may need, think about what would happen to your family if something happened to you. What assets do you own, what debts do you have, do you have any other income, and what are your ongoing needs including childcare or education. You may need to compromise between what cover you would like and what you can afford, or you may feel that you need additional cover above the amount available in your super fund. Remember it is important not to cancel any existing insurance cover until you have a new policy in place, so you're always covered.
Refer to moneysmart.gov.au for more information. If your circumstances are complex you may need to seek personal financial advice.
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The information and any advice in this article does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness having regard to these factors before acting on it. When considering whether to acquire a financial product, before making any decision, you should obtain the relevant product disclosure statement.
This article may contain material provided by third parties and is given in good faith and has been derived from sources believed to be reliable but has not been independently verified. To the maximum extent permitted by law: no guarantee, representation or warranty is given that the information or advice in this newsletter is complete, accurate, up-to-date or fit for any purpose.
