11 November 2024
The main difference between an industry super fund and a retail super fund is how their profits are managed. Retail super funds have a responsibility to shareholders, while industry funds don’t pay dividends or profits to shareholders.
Choosing the right super fund should be made with a long-term view. After all, if you start work at 18, you could be contributing to your super for over 40 years.
There are several types of superannuation funds available. Most people in Australia are with an industry or retail fund. Understanding the differences can help you make a more informed choice.
Industry super funds
Industry super funds are profit-for-member organisations. This means profits are for the benefit of members, not shareholders. They were originally started by trade unions and employer associations, as a joint enterprise to make sure Australians had money set aside for retirement.
As ‘profit for member’ organisations, industry super funds have historically delivered a higher net benefit to members, as illustrated in the chart below. These days, most industry super funds are open to the public, although some are linked to particular industries.
AustralianSuper is an industry super fund, and is Australia’s largest super fund1, with over 3.4 million2 members. We’re not linked to any specific industry. This means anyone working in Australia can join AustralianSuper, whatever you do for a job.
Retail super funds
Retail super funds are commonly run by financial institutions, such as banks, and wealth management companies, however a retail fund can outsource key day-to-day functions to companies within its parent company or the group it owns. These services include administration and investment management – and these sections of the Fund are allowed to make a profit. Profit is then returned to the parent company’s shareholders.
Whilst retail funds return their profits to shareholders, they do have a wide range of investment options and can be joined by anyone.
AustralianSuper vs retail super funds
Past performance alone isn’t always the most reliable indicator of future performance. It’s also not the sole factor to look at to see how well a fund performs.
When choosing a super fund or reviewing your current fund, be sure to look at the net benefit. The net benefit is the investment return, after fees and taxes have been deducted.
The table below compares AustralianSuper’s net benefit – for the Balanced option over 5, 10 and 15 years to 30 June 2024 – to the average of all super funds and retail super funds. The totals show what a member with a $50,000 annual salary would have for 5, 10 and 15 years to 30 June 2024, after fees and taxes, in addition to their $50,000 starting balance and employer contributions3.
AustralianSuper Balanced option net benefit
| Net Benefit Outcomes – Super | |||
|---|---|---|---|
| Over 5 years | Over 10 years | Over 15 years | |
| AustralianSuper Balanced option | $22,560 | $78,012 | $184,785 |
| All super funds (average) | $20,288 | $63,901 | $156,366 |
| Retail super funds (average) | $18,348 | $55,362 | $132,198 |
See how AustralianSuper compares with Chant West’s Super AppleCheck
Compare super funds side-by-side using the Super AppleCheck comparison tool. It’s free to use and provided by superannuation research firm Chant West. You can compare industry and retail super funds with AustralianSuper on an ‘apples-to-apples’ basis that covers investments, fees, insurance and member services.
Other types of super fund
As discussed, there are 2 main types of super funds: industry funds and retail funds. Others you may hear about include:
Corporate funds
These are funds created by a company to provide super for their employees. Once quite common, many have now closed.
Public sector funds
Created for employees of a Federal or State government, most public sector funds are only open to government employees.
Self-Managed Super Funds (SMSFs)
SMSFs are private super funds regulated by the Australian Tax Office (ATO) and managed by individuals, called trustees, for up to 6 members (since 1 July 2021). Opting for a SMSF is another way to take the reins of your retirement savings, from investment decisions to retirement payouts.
Anyone can run their own SMSF. However, you must stick to rigorous regulations, such as setting up an investment strategy and arranging an annual audit by an approved SMSF auditor. As setup and running costs can be high, SMSFs are typically most cost-effective for individuals with large balances.
READ MORE: SMSF WHAT YOU NEED TO CONSIDERReferences:
- APRA Quarterly superannuation fund level statistics March 2024. Released 20 June 2024.
- AustralianSuper has a total of 3.4 million members as at 30 June 2024
- Comparisons modelled by SuperRatings, commissioned by AustralianSuper. The outcome shows the average difference in ‘net benefit’, a measure of past investment returns after administration, investment fees and costs, transaction costs and taxes have been taken out. The results compare the AustralianSuper Balanced investment option and comparable balanced options, for historical periods to 30 June 2024. Insurance premiums and other fees and costs may also apply. Outcomes vary between individual funds. See Assumptions for more details. Investment returns aren’t guaranteed. Past performance is not a reliable indicator of future returns.
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This may include general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision consider if the information is right for you and read the relevant Product Disclosure Statement, available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.