The vast majority of Australians have a Superannuation fund in place. With so many choices, you could be forgiven for wondering which Superannuation is the right one for me.
Knowing the features of each fund can help you make that decision. Below is a list of all the different types of super funds are offered and their key features.
A MySuper is a new type of account being offered by many super funds. It has begun to replace most default accounts put in place by super funds. If you did not nominate a super fund for your employer to contribute to, your employer will now have to pay contributions to a MySuper account as the default. These funds usually offer lower fees and have simple features. They offer a single or life stage investment option and life insurance is offered on an opt-out basis.
A retail fund is available for anyone to join and is usually run by larger banks and Funds managers. They can have hundreds of investment options. Costs can vary significantly. Generally, the newer accounts have lower fee structures associated with them. Some funds also offer a tiered fee structure. For clients with larger balances, these funds can be extremely attractive from a costs perspective.
Larger industry funds are usually available for anyone to join. Some industry funds are restricted to employees of a particular industry. These funds usually offer a smaller number of investment options. Cost can be seen to be attractive but vary greatly as well.
Some industry funds can be quite expensive. As such, it would be wise to make an effort to understand their costs prior to making a financial commitment.
Public Sector Funds
Public Sector funds are restricted to employees of federal and state government departments. They offer a modest range of investment options and usually have very low fees. New members are put into an accumulation accounts where older members can be invested in defined benefit accounts.
A corporate fund is arranged by an employer for its employees. These funds can offer a wide range of investment options and are generally low to mid cost for large employers, however, they can be quite costly for smaller employers.
Eligible Rollover Funds
An eligible rollover fund (ERF) operates differently to other funds. An ERF is a holding fund designed for lost or inactive members. These funds do not accept contributions, as the name denotes, funds can only be rolled in or out. There are limited investments options and fees are variable across funds.
Self-Managed Super Funds
A Self-Managed Super Fund (SMSF) is one that is owned and operated by an individual. It is a private superannuation fund that is regulated by the ATO. An SMSF can have a maximum of four members and all members must be trustees or directors if there is a corporate trustee. All members are responsible for decisions made regarding the fund. An SMSF can be quite costly and a large balance is usually required to make the fund cost-effective.
LifeTime Financial Group are specialist (holding appropriate accreditations)advisors who are ideally positioned to assist you in selecting and then managing your retirement funds.
Would you like to discuss your personal position further with one of our highly qualified financial planners? Why not call us today on 03 9596-7733. There is no cost or obligation for our initial conversation/meeting.
Written by Anthony Stedman of LifeTime Financial Group. A leading privately owned Melbourne based Financial Planning practice.