If you’ve decided to invest your superannuation into an industry super fund, but you’re not sure which is the best fit for you, you’re not alone. We’ve put together a thorough industry super funds comparison guide, including tips on how to select a fund that promises a better retirement for you. Firstly, what are industry super funds?
What are industry super funds?
An industry super fund is a fund that was established to cater specifically to workers in that particular industry. For instance, Hostplus is the go-to fund for hospitality workers, while Cbus caters to the building and construction industry. These funds were originally established by the unions of industries, most only allowed members of their industry to join their fund. However, these days, most funds allow anyone to join, and these funds are known as a ‘public offer fund’.
The aim of an industry super fund is to profit members, and not shareholders. Therefore, industry super funds have traditionally had lower fees than retail funds and deliver a higher ‘net benefit’ to members. On the other hand, retail funds have shareholders, and their profits are returned to said shareholders. They’re usually run by financial institutions, and anyone can join. Traditionally, they have charged higher fees than industry super funds, however, to compensate for this they offer more features such as investment options, and membership has never historically been industry-based. Nowadays however, retail funds have lowered their fees and industry super funds have gained additional investment options and features and are not restricted to certain industries.
How do I conduct an industry super fund comparison?
There are several factors you will need to consider when making an industry super fund comparison. It’s important to take a look at elements such as investment performance and options, fees, insurance, and member services when judging an industry super fund. Carefully considering these factors is the best way to make a more accurate, informed decision.
The best industry super funds in Australia
Identifying the best industry super funds is easy to do with Review My Super. We deliver exceptional, in-depth analysis of each super fund, considering every important aspect of each fund. That means reviewing investment performance, fees, insurance and much more.
The total amount of money superannuation at the end of the March 2022 quarter totalled $3.4 trillion dollars, increasing by 9.7% since the year before. Much of this money is held by industry super funds, and the largest funds by assets held are:
| Super Fund | Funds Under Management |
|---|---|
| AustralianSuper | $244.9 billion |
| UniSuper | $102.6 billion |
| Sunsuper | $98.9 billion |
| REST | $67 billion |
| HESTA | $67 billion |
| CBUS | $66.7 billion |
| Hostplus | $64.5 billion |
| Equipsuper | $33.9 billion |
When we take a look at industry super fund comparisons, ranked by number of members, the story was a little different:
| Super Fund | Number of Members |
|---|---|
| AustralianSuper | 2,468,216 members |
| REST | 1,846,992 members |
| Sunsuper | 1,455,893 members |
| Hostplus | 1,303,176 members |
| HESTA | 925,054 members |
| CBUS | 778,510 members |
While the size of the industry super fund doesn’t necessarily have a direct impact on your experience as a member, it is good to have an idea of the largest funds.
Industry super funds performance
Investment performance is one of the most important factors to consider when finding the best industry super fund for you. After all, better returns mean a healthier balance in your account for when you retire. The Productivity Commission’s report into super fund performance showed that industry super funds outperformed retail funds historically, though this does not necessarily mean the same will continue to happen and this does not mean that every industry super fund is better than every retail fund, there have been some strong performing retail funds and poor performing industry super funds.
You can use Review My Super to help you make industry super fund comparisons. Our resources make it as easy as possible to compare different industry super funds based on performance, by providing clear cut, easy to understand information.
For instance, this table shows the best average annual return to May 31st, 2022:
We can see that several funds had excellent returns over the period, particularly Hostplus Personal – Balanced option. However, an important consideration when comparing investment performance is your risk tolerance. Typically, the higher the proportion of growth assets compared to defensive assets in your fund the higher the return will be while the markets are going up but also the higher the potential for loss is when markets fall.
For example: Hostplus’s MySuper option has just 8% in defensive assets (cash and fixed interest) Compared to Aware Super’s has 31.5% in defensive assets. This partly explains the difference in returns between the two funds over the past 5 years as growth assets have way outperformed defensive assets over the past 5 years. However, if markets change then you may well see a different result.
Which industry super fund has the lowest fees?
Every super fund charge fees, and traditionally, retail super funds charge more than industry super funds. These fees are charged to cover a wide variety of costs, such as administration fees and investment fees, particularly if there is a wide array of investment options.
This table details the five lowest fees among industry super funds, providing a fee price based on a balance of $50,000:
It’s evident that Energy Super provides both a low percentage-based fee, along with a non-existent flat fee. This makes them the best industry super fund in terms of fees paid. For a full table, visit our page on industry super funds.
What is the best industry super fund for insurance?
Not every member has insurance through their super fund, but for those who do, it’s important to consider insurance ratings. Default insurance is often not enough, so do keep in mind that there are other options, and you can tailor your units of insurance according to your needs.
Below is a list of industry super funds, broken down by insurance ratings:
Again, AustralianSuper features in the top five, making it the only fund to do so. TWU super has the highest rating, making it an excellent choice for those who are looking for a high-quality insurance option. However, when it comes to assessing your insurance options, you can now choose insurers external to your fund to be your chosen insurer within your super. As with most things, it pays to compare super insurance across the market to ensure you’re getting the best cover for your circumstances. Review My Super offers an insurance comparison tool designed for comparing insurers inside super.
Which is the best industry super fund?
So, what is the best industry super fund? Well, in terms of historical investment returns, the answer is HOSTPLUS. However, past performance can be misleading, especially after a bull market, which we have just had. When it comes to other considerations like insurance rating and fees, other funds rate highly. AustralianSuper is a great allrounder, but if you want to find the fund best suited to you, it’s best to chat with the professionals.
At Review My Super, we’re always ready to help you make the right choice. Fill in the ‘speak to an advisor’ form on this page and we’ll be in contact to see how we can assist.