Comparing super funds: Who’s who in the super zoo? (updated)

Note: We regularly update this article with the latest data on superannuation funds issued by the Australian Prudential Regulation Authority (APRA). This article contains the latest data available as of May 2013 (for data as at March 2013).

Unless you work in the superannuation industry, how the world of super works can be bamboozling (sometimes it can be confusing even when you know the industry well). This article, on the different types of super funds, helps explains the main players in the Australian super world.

This article should really be titled ‘The what’s what in the super zoo’ because I’m explaining the different types of super funds available, rather than the people involved.

You may find this difficult to believe but there are only 5 types of super funds in Australia, and most Australians can only choose from 3 of these fund types. You can expect to find the following five broad types of super funds:

• Company (or corporate) funds
• Industry funds
• Retail funds (although you may be offered a series of funds via a ‘wrap’)
• Public sector funds (also known as government superannuation schemes)
• Small funds (two-types: self-managed super funds and small APRA funds. APRA stands for the Australian Prudential Regulation Authority, the main super regulator)

Let’s deal with the big numbers first. Based on statistics released in May 2013, there were 506,904 super funds in Australia as at March 2013, and 506,571 of these super funds were small funds (super funds with fewer than 5 members). Nearly all small funds are self-managed super funds (SMSFs) (503,320 commonly known as DIY super funds, and 3,251 of small funds are small APRA funds).

What this means is that if you considering one of the remaining four categories of super fund – corporate, industry, retail, public sector – then you have only 333 super funds to consider. Okay, that is still a lot of super funds, but if we break it down into the individual categories (see table below), the super world looks a little less daunting.

Types and Number of Super Funds

*This grand total excludes pooled superannuation trusts and single-member ADFs

Source: Extracted from Statistics, Quarterly Superannuation Performance, March 2013 (issued 23 May 2013), Australian Prudential Regulation Authority, and earlier years sourced from previous APRA reports.

Briefly, the following are the four types of managed superannuation fund:

• Industry fund. An industry fund usually caters for workers from a particular industry but many of them are now available to anyone.
• Company/corporate fund. A company or corporate fund is generally a super fund with membership only open to employees working for that company. You can’t choose a company fund but you may choose to remain in a company fund, if you’re an employee of the company and an existing fund member. Some company funds permit relatives of existing members to join too.
• Public sector fund. A public sector fund is only available to public sector (government) employees and, in some cases, ex-public sector employees. You can’t choose a public sector fund although some of them let you choose to remain a contributing member when you leave the public sector – in these circumstances you may be able to arrange for your new employer to contribute to your public sector fund.
• Retail fund or master trust. Financial institutions such as banks, financial planning groups and fund managers run retail super funds. Anyone can join these types of funds. You may be a member of a retail fund if your employer pays your Superannuation Guarantee (SG) contributions into a corporate master trust. A corporate master trust is just like a master trust for individuals but on a much larger scale.

If you visit a financial adviser you may also hear the terms ‘super wrap’ and ‘master trust’. These two categories generally offer you access to lots of managed fund investments, and fall under the category of ‘retail funds’.

You can also consider opening a Retirement Savings Account (RSA): you can choose from 9 RSAs. An RSA is a low-risk and low-return superannuation account provided by banks and other financial organisations. RSAs, however, are more a parking vehicle rather than a long-term investment option. RSAs represent less than two-tenths of a mere 1 per cent of all money invested in the superannuation market.

Note: Unless you’re already a member of a company fund (although some company super funds permit relatives of employees to become members) or, already a member of a public sector fund, an employee can generally only choose from three types of super funds:

• Industry funds
• Retail funds
• DIY super funds (SMSFs).