Comparing super funds: Who’s who in the super zoo

Note: Every 3 months, we 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 March 2012 (for data as at December 2011). The next article update will take place in June 2012.

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 five types of super funds in Australia, and most Australians can only choose from three 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
• Small funds (two-types: self-managed super funds or 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 March 2012, there were 462,114 super funds in Australia as at 31 December 2012, and 461,752 of these super funds were small funds (super funds with fewer than 5 members). Nearly all small funds are self-managed super funds (SMSFs) (458,561, commonly known as DIY super funds, and 3,191 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 362 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.

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

Source: Extracted from Statistics, Quarterly Superannuation Performance, December 2011 (issued 8 March 2012), Australian Prudential Regulation Authority.

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 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 a public sector fund, an employee can generally only choose from three types of super funds:

• Industry funds
• Retail funds
• DIY super funds.

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