Superannuation 28/09/2020

Prepare for Retirement with Retail Super Funds

Retail super funds are for-profit funds managed by huge financial establishments like insurance providers and banks. The profits collected are distributed among members, shareholders, and financial advisers. Below are some examples:

  • BT Super by Westpac
  • OnePath Super by ANZ Bank
  • Colonial First State Super by Commonwealth Bank
  • MLC Super by NAB

Features of a retail super fund

  • Retail super funds are available to all.
  • You can choose from a vast range of investment portfolios.
  • The fees charged are usually medium to high range. Some offer a no-frills option, the MySuper.
  • Financial planners recommend this type of fund. Make sure that you check if the financial planner paid any commission or fees once you sign up.
  • These are not defined benefit funds. They are normally accumulation funds. This means that the super balance relies on you and your employer’s contributions. In a defined benefit fund, the final super benefit or pension is evaluated using a predetermined calculation.

There are different factors used in the calculation. This includes your salary a few years before retirement, average salary, age, and years in service.

  • The companies may wish to keep some of the profits. This means you will receive lower returns.

Advantages and disadvantages of retail super funds

This type of fund also has its own pros and cons. Make sure to weigh each one before deciding.

Advantages

  • Wide range of choices for investment
  • You will get reasonable results within at least 12 months
  • A big section of advisers is available to give good advice

Disadvantages

  • Self-managing funds are cheaper for amounts more than AUD 200,000
  • The fund depends on the experience and skills of the financial adviser

How to determine if a retail super fund is worth investing in

You have several choices for the retail super fund. Financial advisers may try to sweet talk their way just to get you to sign on. Take note of the following features when reviewing a retail super fund:

  • Historical performance

Review the long term returns of the fund for a range of 5 to 10 years. It is preferable to check the long term returns since this fund is a long term investment.

  • Target low fees

Your balance decreases by a smaller amount every year if you have cheaper fees. However, you may also discover that funds with more expensive fees perform better.

  • Choices for investment

You will be able to maximise your fund if you acquire a matched investment portfolio.

  • Insurance

In general, insurance is less expensive if you obtain it within insurance. It’s better to check if it sufficiently covers your needs.

  • Customer service

How do you want air to out your concerns or review fund performance? Do you want to check your fund online, would you rather talk to someone on the phone? These are factors you need to consider.

Things to think about before applying for a retail fund

Before anything else, decide if you want to open a retail fund or switch to a retail fund. There are different reasons why you may plan to switch funds:

  • Do you plan to combine your super into a single account?
  • Do you want to lessen the fees being charged?
  • Are you seeking for a better fund with better features?
  • Do you want to increase your returns in the long run?
  • Are you resigning from your job and you plan to leave a corporate fund?

Once you run down these questions, you can go online to switch or open a retail super fund.

Check out types of super funds with Makes Cents

A retail super fund offers several benefits. You need to go through different super fund choices before committing. Compare different funds available in Australia to know which one perfectly fits your needs. We also have a list of the Most Effective Tips for Choosing your Superannuation Fund