Q: What you do is very important, thank you. I am 62 years, retired and draw an allocated pension. What I need is to get sound independent advice about whether I am in the best fund for my needs and how my super fund compares. I am considering changing super funds, but I need to know whether the super fund I am considering is secure and strong (as I believe it to be).
A: Many thanks for your words of support for SuperGuide. We believe there is a need for a free and independent site for consumers on superannuation, and the many emails that we receive and the exciting growth in the number of new and regular visitors to the website, has confirmed that a website such as SuperGuide is necessary. We have close to 2 million unique users referring to SuperGuide each year.
Since SuperGuide provides independent information on superannuation for consumers, we do not operate a financial advisory business, and we do not recommend particular advisers or financial products or organisations. We do however operate the SuperGuide Directory which allows advisers and other super-related service providers to list for free, and serves as a starting point for our readers seeking expert assistance.
I cannot provide you with specific financial advice about your investment options, or whether the super fund you’re considering is a secure option, or whether there are better options available in the market place. What we can do is provide general, current and comprehensive information on the top-performing funds, the monthly returns delivered by super funds, the long-term returns and plenty more data. The information is invaluable for anyone hoping to compare their super fund’s investment returns with other super funds in the market (to access these SuperGuide articles see our special section Is my super fund performing?
Checking the reputation of a super fund
We can also provide guidance on how to research a particular super fund, or compare several super funds. For example, if a reader is seeking information on whether a super fund is secure and strong you can visit the particular super fund’s site or phone the super fund and ask them this question. For an outsider’s view, many of the large super funds are reviewed by rating companies such as SuperRatings, SelectingSuper and ChantWest, which, depending on the rating a super fund receives, generally indicates the super fund is going to be around for awhile. You can visit any of these rating company websites to find out what ranking a super fund has received. I also provide a periodic summary of the top-performing super funds in the SuperGuide article Investment performance: We’re the best super fund. No we’re the best…
Reviewing a super fund’s investment performance
If you’re seeking information on assessing your fund’s investment performance, then you need to be mindful of at least three factors that determine a fund’s investment performance – asset allocation, level of fees (after tax) and quality of investment management over the longer term. For example, a cash option is going to deliver a lower return over the longer term than shares or property, even though during the Global Financial Crisis, cash was king.
You can find out the performance of a super fund’s cash option, and other investment options on its website. This particular page on the website may be a useful reference for anyone interested in comparing the returns of super funds because along with the specific returns delivered by a super fund, they often provide the benchmark returns for the different investment options, which you can measure against your own fund’s returns. Many super funds present the investment performance data in a similar format.
You may also be interested in some of the following free or low-cost information services.
- Our special section on investment performance on the SuperGuide website (Is my super fund performing?), where you can find all of our performance-related articles, including top-10 performers over the short term and longer term, monthly performance data, annual performance figures and data on different investment options.
- Check out APRA whole-of-fund performance tables. The Australian Prudential Regulation Authority releases league tables listing the investment performance of the 200 largest APRA-regulated super funds. Note that the APRA tables don’t report investments returns on pension accounts (see Point 4), or returns on the different investment options available within a super fund, although they are releasing this data via quarterly statistics on MySuper products. Find out more about the APRA tables by reading the SuperGuide article Exposing the performance history of Australia’s largest 200 super funds or access the APRA tables directly by clicking here.
- Follow the daily newspapers. Monthly, or quarterly, many of the major daily newspapers publish tables containing the top performing super funds and what the benchmark returns are for the different investment options. If your fund is missing from the top 10 or 20, that doesn’t necessarily mean your super fund is a dud performer because often the periodic tables are measuring the top performer for that month, or that quarter. What matters is whether a super fund is delivering a strong return over a long period of time. Some of the daily newspapers (usually on a Wednesday) also provide data on many of the retail superannuation funds. Retail super funds are generally offered by banks and other similar financial organisations.
- Ask your super fund for advice. In July 2009, the Australian Securities and Investments Commission (ASIC) announced that super funds can now provide a limited form of financial advice to its fund members, provided the super fund holds an Australian Financial Services licence. The motivation for introducing this cheaper advice service is to give Australians some guidance when making decisions about increasing super contributions, changing investment options, or taking out life insurance within a person’s existing super fund. This cheaper advice option does not allow your super fund to give you more complex retirement planning advice, or to give advice about switching funds. The intra-advice option is explained in my interview with ASIC’s former head of superannuation, the chief architect of the low-cost advice concept, and what it means for consumers, in the SuperGuide article Cheap financial advice available – what does it mean for consumers? Many super funds are now offering intra-fund advice, and in many cases this advice is provided free of charge. Ask your super fund what they can offer you in terms of intra-fund advice.
- Check out ratings companies. SelectingSuper, ChantWest and SuperRatings provide a consumer service rating funds on different levels. You can compare one or two funds against your existing super fund for a fee. For no cost, you can check out the ratings for most of the large super funds available in the marketplace. SelectingSuper also provides free information on the top-performing pension funds.
How do I compare super funds?
How do I find guidance on seeking financial advice?
You can find more information on financial advice, and finding an independent adviser by typing in ‘financial advice’ in our search function at the top right-hand side of SuperGuide website.