What is Your Funds Manager Doing with Your Super?

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Blind trust in your super fund manager or entrusting your future funds to your current employer is never a good financial strategy. Luckily, it’s not too late to seek out a better option from an expert eye.

Do you know what’s going on with your super? Scratch that last question… Do you even understand your superannuation fund? There are more than 200 different superannuation funds in Australia, encompassing these five types:

  • Retail Funds
  • Industry Funds
  • Public Sector Funds
  • Corporate Funds
  • Self-Managed Super Funds

And while many individuals have probably tuned out or clicked away from this page, YOU care how your money is being spent, invested, and used for your future… and you would never blindly trust your super fund to the first bloke who offers to help, right?

Even paying just a bit of attention to the matter can do wonders for your retirement savings. Superfund performance varies over time and your needs will change as you age. So, as much as many fund managers would like you to believe, there is no single best fund that will make the most of your contributions through your entire lifetime.


Is Your Super on the Worst-Performers List?

According to Stockspot’s Fat Cat list, retail super funds provided by companies like AMP and OnePath continue to charge high fees but deliver poor returns for its members. To come up with its scores, Stockpot evaluated 600 of Australia’s biggest superannuation funds. Compared with other funds in the same asset group, it then ranked the funds on how they performed after fees over five years.

Those now aged 20 and 30 who have more years of work ahead of them will be the people worst affected. People nearing retirement, however, are also badly impacted by fees. Although their investment strategies typically become more conservative and thus fees decrease, the greater size of their portfolios suggests that they lose a significant portion of their returns.

So whether you’re looking to retire soon or have a few more decades of work to go, taking control of your super now is by far the best strategy to ensure a comfortable retirement living.


How to Choose a Superfund

By filling out the Australian Taxation Office’s Superannuation standard choice form when they start a new career, most individuals can pick the super fund they want their super contributions paid into. However, around 70% of Australian workers let their employer pick their super fund for them at last count.

Some employers all but compel you to go with the company’s preferred super fund, particularly if you’re a contractor, possibly because it’s simpler for them to sign up as many workers as possible admin-wise or the super fund encourages them to do so.

And with every new job, a new superfund option arises, causing little bits of money to be spread across multiple accounts, all of which will charge a variety of fees. BUT, there are a few things you can do right now to take charge and overcome the once blind trust you had in these Fat Cat Funds:

  • Look For Positive 5-Year Performance: superannuation is a long-term investment, so search for a fund that has proven effective over 5+ years and not just a year or so.
  • Taxes, Fees, & Other Figures: make sure to look at all the variables like taxes and fees when determining the performance of your potential super.
  • Compare Like-to-Like: when choosing between two different funds, make sure you look to fund with similar strategies or roughly the same mix of shares, property, and cash.
  • Seek Out Sound Advice: speak with a trusted advisor who has no commercial connection to any of the funds they recommend, like those found here.

In a nutshell, after fees are taken into account, the aim is to find a fund with decent long-term returns and to make sure you don’t pay for anything you don’t need.

Typically, doing a little analysis is a smart idea rather than just sticking for whatever fund the employer happens to be with. It could be a perfectly good fund, but before being one of the 70 percent or so of Australians who let their employers select their funds, double-check to ensure your super fund fits your specific (and timely) needs.

It rarely makes sense to have more than one fund and can genuinely cost you in the long run. So if you find a super fund that you are really happy with, don’t be afraid to take it with you to your new employer instead of opting-in to their less-than-ideal offerings.


Dane Jansen
Dane is a Managing Partner/Responsible Manager at Positive Dynamics. He embraces his leadership skills to provide guidance to his clients giving them the confidence and conviction to achieve financial success.
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