Types of Superannuation Funds in Australia
How the world of how superannuation funds work can be confusing. This article, describes the different types of super funds in Australia, and it will hopefully give you a basic foundation to understanding your own retirement monies.
There are only five main types of superannuation funds in Australia, these include:
- Industry superannuation funds
- Retail superannuation funds (also known as a 'wrap')
- Corporate superannuation funds
- Public sector superannuation funds
- Self-managed superannuation funds (often shortened to SMSFs)
These superannuation funds are further explained below:
1. Industry superannuation funds
An industry fund usually caters for workers from a certain industry, such as HostPlus who is a superannuation fund for those in the hospitality industry. However many industry superannuation funds are now available to anyone.
Industry superannuation funds often tout 'low fees' and better transparency on the television ads; though you should ask whether this helps build your superannuation in the long term.
2. Retail superannuation funds
Retail superannuation funds are often run by banks and fund managers, such as Colonial First State (FirstChoice & FirstWrap) or BT. Generally anyone can join this type of superannuation fund.
If you visit a financial adviser you may also hear the terms 'super wrap' and 'master trust'. These two types of investment vehicles generally offer you access to lots of managed fund investments, and fall under the category of 'retail funds'.
3. Employer superannuation funds or Corporate funds
An employer funds or corporate fund is generally a superannuation fund with membership open only to employees working for that company. It doesn't mean you have to join that particular fund, it just means the option is available to you. One example of a corporate superannuation fund is the Telstra Superannuation Scheme.
Generally speaking, when you leave your employer you may choose to remain in the corporate superannuation fund. Some corporate funds will also allow relatives of existing members to join too, however check with the fund you have in mind before taking action.
4. Public sector superannuation funds
A public sector superannuation fund is only available to public sector employees (i.e. government employees) and, in some cases, ex-public sector employees.
Just like the corporate superannuation fund, some funds allow you to remain a member when you leave your employer, however this depends on the individual public sector superannuation fund.
5. SMSF - Self Managed Superannuation Funds
Self Managed Superannuation Funds, SMSF's, or DIY Superannuation have become popular over the years. Particularly in the past 12 months with the sudden drop in superannuation balances across Australia due to the global financial crisis.
As the name states, SMSF are owned and managed by individuals or small groups of no bigger than 4 members. You decide when and where you invest. If you are considering a SMSF, it is best to seek financial advice on how to best setup your own self managed superannuation fund as there are strict rules and regulations that must be adhered to.
Consider getting superannuation fund advice
Good advice can be an invaluable investment when it comes to finding the right superannuation fund. Don't gamble on your future and contact one of our advisers to get your superannuation in order today.
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December 2010
