Wednesday, 6 June 2012

What is the difference between Industry super funds and other types of superannuation funds?

This is my second post on superannuation funds and will attempt to briefly describe the different categories of superannuation funds.  For an overview of how the superannuation system works in Australia see my previous post on this topic.

Broadly there are 4 types of super funds - Retail Funds, Industry Funds, Employer Funds and Self Managed Super Funds.  Below I will outline the main differences between the funds.  It should be noted that for all the externally managed funds (i.e. all except the SMSF's) there are external fund managers used so differences mainly come down to fees as performances tend to be very similar.  Also previous performance for super funds especially is no indication of future returns so looking at performance history is a silly thing to do.

Retail Funds

  • Open to anyone in the public
  • Most like a managed investment fund - you put your money in and pay a fee for the service they provide
  • The fee is typically towards the higher end of the range but there are many funds that offer low fee options
  • Wide variety of investment options - you can basically tailor it to your needs and wants
  • Your financial adviser will often recommend these because they pay financial planners a commission (keep your eyes open for this!)
  • Typically don't invest the money themselves but rather outsource to specialist fund managers

Industry Super Funds

  •  The larger funds are open for anyone to join.  Other funds may only be open to those members within certain unions / industry groups
  • They are not for profit funds and fees are used for the members benefit
  • Typically lower fees than retail funds but some charge high fees so make sure you watch out for this
  • Narrower variety of investment options - 10 - 15 seems to be the max.  However they are pretty standard types of portfolio allocations which I don't think is a bad thing
  • Your financial advisor probably wont recommend them because they do not pay commissions to investment advisers
  • Typically don't invest the money themselves but rather outsource to specialist fund managers

Employer Funds

  • Only for employees of a particular employer or group of employers
  • The most common of these are the public sector superannuation funds
  • Note that these can often be defined benefit funds (instead of the accumulation funds that industry and retail funds normally are)
  • Generally the fees are extremely low

Self Managed Super Funds

  • A 'do it yourself' super fund
  • Each fund must have between one and four members with each member being a trustee
  • Quite a complex regulatory regime but gives you complete control over your investments and investment decisions
  • You cannot pay fees to yourself or any other trustee but you can pay fees to outsiders (e.g. advisers, fund managers etc)
  • There is a significant compliance cost associated with self managed super funds so to make it worthwhile you really need ~$250,000 in retirement savings
  • This money cannot be used for anything other than your retirement so you cannot combine your whole investment portfolio


  1. I have an account with Hesta an industry Super fund and they are really excellent.

  2. I read your blog. Thanks for sharing such a good information about Self Management Super Fund ..
    Self Management Super Fund