CHOICE’s survey of more than 1400 members reveals dramatic variations in customer satisfaction with the different types of super funds. Perhaps most striking is the degree to which members of “retail” funds – those typically owned by banks, fund managers and insurance companies – are less satisfied than others; see the results table for more.
Public sector funds: Defined benefits are more often paid to members of public sector funds than other types. This means retirement income is based on a percentage of your final salary, years of service or some other formula, and not subject to the vagaries of investment market performance. And some public sector employers contribute more than the compulsory 9% minimum – 15% to 25% of salary is not uncommon. While most defined benefit funds are closed to new members, some public sector accumulation funds, such as the very low-cost First State Superannuation Scheme, have open membership and aren’t restricted to government employees.
Corporate and industry funds. Like public sector funds, both are considered not for-profits. As their name implies, corporate funds are arranged by companies for their employees, invariably using the same fund managers as retail funds, but often with more competitive fee structures. Industry funds are also known for their relatively low fees.
Self-managed super (SMSFs) is the fastest-growing sector, and is now worth more than the corporate, industry, public sector or retail categories, with about one-third of total superannuation assets. For some, DIY super can be costly and time-consuming, but it’s rewarding for others. We found satisfaction with SMSFs is higher than for all public offer funds, and 20% of respondents expecting to switch from other types of funds plan to take the DIY route.
Almost half of all respondents feel they’re on track for a comfortable retirement – but 25% do not. Confidence about the future is greatly influenced by the type of super fund people contribute to; 57% of corporate fund members feel on track, which is not surprising given these funds often have low fees, good performance and on average, wealthier members. Almost half of all public sector fund members feel on track, but the number drops to 39% and 37% for members of industry and retail funds. Industry fund members tend to have below-average balances, while confidence in retail funds is lacking for the reasons already identified.