Choosing a super fund

If you’re an employee, you’re eligible to choose the super fund that your employer pays your super guarantee (SG) into, provided you’re in one of the three categories below.

• You’re employed under a federal award.
• You’re employed under another award or workplace agreement that doesn’t require superannuation support.
• You’re not employed under an award or industrial agreement. This includes contractors who are primarily paid for their labour.

Learn more about whether you can choose your super fund.

If you are eligible to choose your super fund, there are five potential options (though not every option is available to everyone).

• Retail funds – These are funds run by financial institutions. They’re generally open to anyone.
• Industry funds – These funds are generally designed for people who work in a particular industry, but some industry funds will allow anyone to join.
• Public sector funds – These funds are generally only open to government employees.
• Corporate funds – These funds are usually only available to employees working for a specific employer.
• Self-managed super funds (SMSFs) – These are funds where you have more responsibility in terms of administration, compliance and investment decisions.

There is a wide variety of super funds available in the market, and choosing your fund is an important decision. It’s important to compare your super fund options in relation to your individual financial circumstances and goals. Key factors to consider when choosing a super fund include its performance history and the fees it charges its members.

Your employer will likely provide you with a Superannuation Standard Choice Form when you commence your employment with them. Alternatively, you can download this form from the Australian Taxation Office’s website.

Choosing an investment option

Choosing an investment option within your super fund is an equally important decision, though it’s one that many Australians neglect. Around 80% of Australians with superannuation accounts have their money invested in the default option, which is where you’re placed if you don’t choose an investment option.

Default options are usually ‘balanced’ or ‘growth’ investments and normally have around 60-80% of their funds invested in growth assets such as shares and property. These options are designed as an appropriate investment strategy for a large number of members across the many years they will be saving for their retirement.

However, your fund’s default option may not be best for your particular circumstances and risk profile. It’s important to understand that different types of investments have different levels of risk. In general, the higher potential investment return, the higher the risk, and vice versa.

It’s important to regularly assess your investment option over time as your circumstances change and to make a switch if necessary. For example, you may want to choose a different investment option in retirement if you’re receiving a pension.

See also our section on SMSF investment.