Strongest super funds of the past 10 years: how yours compares

Were you a member of one of the 20 best superannuation funds of the past decade? SEE THE LIST

Michael England has been happy with his superannuation fund. Picture Mark Brake

Australia’s strongest superannuation funds of the past decade are delivering tens of thousands of extra dollars to their members, highlighting the importance of taking super seriously.

Financial regulator APRA’s latest fund-level data shows the best performers have produced a 10-year rate of return above 8 per cent, while the weakest returned barely half that amount.

For an average 40-year-old worker with $50,000 in super, this can lead to a final retirement balance almost $200,000 lower – $246,000 instead of $439,000 – simply by being in the wrong fund.

Superannuation specialists say returns over the past decade have benefited from lower interest rates globally, and urge members to take a long-term view with a focus on low fees and high investment returns.

“A 1 per cent difference in returns over a working lifetime is equivalent to around $100,000 in retirement benefits,” AustralianSuper’s group executive, membership, Rose Kerlin, said.

“There’s no point being in a low fee fund if the investment returns are poor, and vice versa,” she said.

“AustralianSuper uses its size and scale to reduce costs and, as the nation’s largest super fund, we can take advantage of opportunities that aren’t available to smaller funds.”

APRA’s data shows four of Australia’s biggest super funds – Unisuper, Cbus, AustralianSuper and Hostplus – were among the six funds earning 8 per cent or more annually over 10 years. Number one was the Goldman Sachs & JB Were Superannuation Fund, at 9.4 per cent.

The data measures a fund’s overall return on assets, rather than its individual investment options such as high-growth, balanced or conservative. Many of the worst performers were approved deposit funds or rollover funds. However, 50 of the 124 super funds examined had 10-year returns below 6 per cent.

QSuper head of funds management Elizabeth Kumaru said when examining super fund options, people should compare returns over the longer term, and short-term low or negative returns should be expected when financial markets fell sharply.

“A well-diversified investment strategy, that can smooth out the impact of market ups and downs for members over the long-term, is more important now more than it has ever been post the GFC,” she said.

Rose Kerlin, group executive, membership, at AustralianSuper

“Creating a smoother ride requires having a diversified portfolio – one with assets that do well in growth phases, but also assets that protect you in downturns.”

People’s Choice Credit Union financial planner Craig Rothall said some super funds got crunched because of COVID-19.

“And based on that, you may not wish to invest in them, but if you look longer term you can see they are some very good performers among them,” he said.

“For me one of the biggest factors is the amount you pay in investment and administration fees to your super fund.

“That’s money that’s eating away at your superannuation, which will ultimately affect the bottom line.”

SUPER SAVER HAPPY WITH HIS FUND

Being a member of one of the nation’s best-performing superannuation funds makes Michael England feel good.

“It means you’ve made a sound decision and you’re getting good returns on your investment,” said the 58-year-old AustralianSuper member.

“In my opinion, one of the benefits of being in a big fund is that they can provide stability by investing in wide range of asset classes,” he said.

Michael England has been pleased with his super fund’s performance. Picture Mark Brake

Mr England said it was important to see superannuation investments as long-term but he still checked his fund regularly.

“Probably too much – at least once a month but often once a week,” he said.

“But that doesn’t mean I chop and change. I believe in sticking to the plan that has been put in place for my risk profile.”

Mr England likes the analogy of superannuation being like a fruit tree. “You have to protect the tree, keep it healthy, to make sure it produces plenty of fruit, and that fruit is your retirement income,” he said.

HOW TO SWITCH SUPER FUNDS

• Switching superannuation funds is simple and can be done online or by phoning a new fund, but there are some potential traps.

• Firstly, find a new fund after researching its fees and long-term investment returns. Comparison websites can help here.

• Super funds do not generally charge exit fees, but there may be fees for selling down some investments within a fund. Check what charges apply.

• Valuable life insurance and income protection insurance within your existing super fund may be cancelled in a switch. Retaining a small amount of money in the old fund to cover insurance costs may help.

• Your new fund should help you transfer your savings to them.

• Update your super fund details with your employer.

• Before making your move it can be a good idea to seek professional advice.