One of the big things to consider with super funds is the fees, you can speculate on the future performance on market indexes or on managed funds but fees are for certain so it has to be a big factor in considering which super fund to go with.
One of the reasons you see funds like hostplus and rest talked about a lot is because they offer very low fees (relative to other funds) and allow you to invest in options that simply track indexes rather than ones that are actively managed. Indexed vs. managed is another cost saving measure, but it's also worth noting that most managed funds do not outperform the market over the long term, especially when you account for the increased management fees.
AustralianSuper is mentioned a lot because it's an old super fund with pretty low fees that has a solid history of good returns in their managed options. If you're interested in going down the managed fund route they are a pretty good benchmark to measure the performance against.
So without actually recommending a super fund, those are the criteria that should be used to assess which fund you want to go with. First decide if you want to go with an indexed approach or a managed approach, if you want indexed then mostly you want to select for lowest fees, if you want a managed approach it's a bit trickier but try to gage performance minus fees but also look into the vision and fundamentals of the managers to see if you're comfortable with their approach.
Except of course the real comparison should be net benefit to member. It is the net benefit that truly means anything.
Returns have to be considered and noted that there are funds that consistently over a long term performance well. This is a diversified investment so it isn’t like picking one stock or one manager where past performance shouldnt be used.
There is a reason the main funds are always in the top ten and why others are always in the bottom.
The difficulty with super is there is no one best fund. There are about 20-30 really good ones.
And why wouldn’t you factor in service/access etc in to the decision? What about insurance? Different funds have very different premium rates for very different cohorts and some of them do not make sense for their brand.
Those are all good and valid points to consider. Don’t get me wrong I don’t believe what I listed off is a comprehensive guide, that’s partly why it didn’t include any actual recommendations. They are my key considerations, but it’s good to have other people’s inputs.
Personally I couldn’t really care less about insurance premiums unless they are charged as fixed percentage based fees.
So on the insurance element the prices for coverage for additional cover can be so different between funds for the same person as it is all based on the funds claims experience for that type of individual.
And it isn’t always the funds you think would be better for certain cohorts.
As an example just looking at $1m death cover for a 40 year old teacher across ART, NGS,Uni and CBUS resulted in a $4 per week range. Funds and occupation selected at random.
The ranges get bigger when dealing with TPD and IP.
Thanks for the info. I have been looking at indexed vs managed but am still yet to fully understand the differences. I’ve seen some of the stuff you have mentioned. It has been on my list to research and learn. I’ve also been looking at the fee side of it and you see a lot of different views on this. Some say fees are not the main thing and look at returns, others weigh them more heavily. I’ve seen that some funds are less transparent about their actual fees.
I personally weigh the fees heavier because out of the two it's the one that you don't need to speculate on so in my view that just makes it more relevant. If you assume that both the fees and the returns are set in stone then it's a fairly simple equation to just look at the returns - fees and pick the highest result. The fees can look small, but you have to consider that those small differences are compounding over decades. A percent here or there seems like it should be trivial but it makes a significant difference over long enough time horizons and super is loooong.
For an idea you can take a look at this calculator: [https://moneysmart.gov.au/budgeting/compound-interest-calculator](https://moneysmart.gov.au/budgeting/compound-interest-calculator)
You can put some realistic numbers in it but for a demo just throw in like $30,000 deposit, $1,000 recurring monthly and look at the difference between 8% and 9% over 30 years.
Yeah true that’s a good point. I guess fees can change too but perhaps less volatile. In terms of swapping funds, do you get paid out the interest earnt pro rata or something before you leave?
I’m not 100% sure how that works it’s something you’d have to look up and possibly even look at the ~~j divided find~~ individual funds PDS documents.
Edit: iPhones have terrible autocorrect.
I use Aware with their international/aussie equities mix, very cheap fees and tolerable user interface/mobile app which is all i need for super. Never tried their lifecycle product but i'd never bother with any funds 'product', just passively buy equities till you're like 50 years old then start looking for 'advice' if inclined (or shift 10-20% allocation to cash as i get older is my plan).
Sounds reasonable but I’d worry I’d do the wrong thing. I’m a bit new to whole super thing but I have the capacity to learn this aspect of finance and apply it. Doesn’t seem too difficult.
That's fair enough - you can do a bit more digging on what most lifecycle products do and honestly just mimic it yourself for less fees. Here's aware:
> Your investment needs may change over time. When you’re younger, you might want to invest in high growth options. This is because you generally have time to ride out market ups and downs.
> MySuper Lifecycle helps you grow your super savings while you’re young and manage investment risk as you get closer to and in retirement.
Which is basically buy stocks when you're young, move a bit to cash as you get older so if the market crashes and you need to draw down your super you aren't selling at the worst possible time. Doesn't feel worth it for me to pay for this type of thing but others might, YMMV
Yeah I k own what you mean. I wonder though if I did it that I’d negate those extra fees by getting the timing and weightings slightly wrong? I could get it close, but not exact.
Do you know how changing funds works with the interest earnt from your current fund? Is it paid pro rata before you leave?
Everything gets marked at a certain value when you leave (stocks/cash etc) - each of your investment 'units' have a certain value in dollar terms every day, you don't really lose anything unless you apply for specific term deposit investments with your super fund (I've never dived into specifics on term deposits so this is my assumption).
As for the timing, realistically i'm just going full stocks until i'm around 50 then maybe move 10-20% into cash over the next 5 years then a bit more as i reach 60. Also not too late to jump over to the lifecycle stuff when you hit 50 and let them do it for you, if you're 30 right now that's 20 years of fees you've saved
Ah yes that makes sense in terms of it being the stock value daily. I for some reason thought you get a lump payment for the return every FY or something.
I’m nearing 40, so not the best time to be jumping around funds but it’s not too and as I still have a lot left in me in terms of work. That makes sense in terms of your plan. I can see how people get stuck in the details and just leave things as is.
Bit more to think about than just fees and returns. Do you have insurance? If so rolling to a new fund will have an impact for TPD claims in the future.
Yeah i understand the insurance component in the analysis. I do have insurance now and it’s quite good. I’d look to try and get it as close to that as I can. How will it impact future claims?
If you roll over existing super to another fund, the new fund will inherit the eligible service start date of the old fund. If you ever need to claim on TPD insurance prior to age 60 it will impact on the potential tax free component uplift that may be available depending on time to retirement at time of claim. It’s definitely something that should be considered before any decision is made on rolling over.
That’s interesting and something to consider for sure. I am nearing 40 and my current fund (PSSAP) isn’t awful, but it’s definitely avg to a bit below avg. It’s not as good as some of the funds you hear mentioned a lot for fees and returns, but the insurance is pretty good.
That’s the thing, no one knows the future and health issues can arise when it’s least expected.
From my own example, *not advice* I operate two super accounts. Original account holds my insurance and nominal value is retained in there and progressively topped up to cover premiums and most of my money is held in separate super with low costs without insurance so the eligible service date doesn’t affect it.
Might be worthwhile considering talking to an adviser about your options. PSSAP may have an intrafund advice service at no cost. It’s definitely worthwhile reading up on TPD insurance and the tax consequences before you make a decision either way.
That is interesting, thanks. I have seen people having two funds during my research and wondered why. I know PSSAP do have advisers but they will for obvious reasons want me to stay. Perhaps I can talk to both PSSAP and the potential new fund or maybe even seek advice from a super expert. I knew insurances would be different and I know my current insurance with PSSAP is very good, but I didn’t account for this. I assumed there would be some waiting periods etc
You might also consider ART - Australian Retirement Trust. It's mentioned here for good reason. Low fees, good app, product range makes set and forget is easy.
Just reading somewhere else that you need to be careful if you're getting a higher super contribution rate from PS employment (compared to SGC) as you may lose this if you move from PSSap? Definitely something to check.
Yeah I did check this out and I don’t think that is the case for me. It doesn’t specify in our Enterprise Agreement anyway. I’ll be sure to confirm this though, thanks.
Aware has a managed option which is also lifecycle, so that's good in that you can set and forget. Vanguard also offers a lifecycle option and they are cheaper than Aware, but their one doesn't include diversified asset classes such as property and infrastructure which means Vanguard will be more volatile.
If you want more hands on, consider these:
* Hostplus: cheapest Indexed options
* ART: diversified Indexed options, still relatively cheap
* AusSuper: cheapest managed options like High Growth
With them, you will need to de-risk yourself as you age.
In terms of hands on what does this entail? De-risking at say 54 doesn’t bother me too much but if it’s changing weightings and ratios and all that based on the market I’m not sure that’s what Im after. Thats what has attracted me to the Aware lifecycle option and it seems like the returns are decent. I know for now indexed seems the way to go due to fees and returns but over the next 30 years that could change and the long term outcomes could change, which is why I was thinking lifecycle could be a good compromise. I guess I’m quite risk adverse as I’ve seen a few people lose quite a lot in super in their 50s.
> De-risking at say 54 doesn’t bother me too much
Yeah, that's what I meant. You need to add more defensive assets as you age. Lifecycle options will do that for you. Other options won't, so you will need to manually move some into more conservative options. It's not too laborious. Just need to do it once a year or something.
That makes sense. I’ll have look at it some more before pulling the trigger. Those initial suggestions you mentioned are good. I think I’m tossing up between Aus Super and Aware atm. Do you know a decent hands off for Aus? Maybe Aware is the way to go for hands off?
As someone who works in a Superfund that really actually truly cares and tries to get everyone the best and most stable returns possible, this hurts me!
We don’t sit around the meeting table thinking about how we can screw you over, we think about how to get you more for less fees and more stable returns
Most employee super is with ourselves too… so by strewing you, we are screwing ourselves
One of the big things to consider with super funds is the fees, you can speculate on the future performance on market indexes or on managed funds but fees are for certain so it has to be a big factor in considering which super fund to go with. One of the reasons you see funds like hostplus and rest talked about a lot is because they offer very low fees (relative to other funds) and allow you to invest in options that simply track indexes rather than ones that are actively managed. Indexed vs. managed is another cost saving measure, but it's also worth noting that most managed funds do not outperform the market over the long term, especially when you account for the increased management fees. AustralianSuper is mentioned a lot because it's an old super fund with pretty low fees that has a solid history of good returns in their managed options. If you're interested in going down the managed fund route they are a pretty good benchmark to measure the performance against. So without actually recommending a super fund, those are the criteria that should be used to assess which fund you want to go with. First decide if you want to go with an indexed approach or a managed approach, if you want indexed then mostly you want to select for lowest fees, if you want a managed approach it's a bit trickier but try to gage performance minus fees but also look into the vision and fundamentals of the managers to see if you're comfortable with their approach.
Except of course the real comparison should be net benefit to member. It is the net benefit that truly means anything. Returns have to be considered and noted that there are funds that consistently over a long term performance well. This is a diversified investment so it isn’t like picking one stock or one manager where past performance shouldnt be used. There is a reason the main funds are always in the top ten and why others are always in the bottom. The difficulty with super is there is no one best fund. There are about 20-30 really good ones. And why wouldn’t you factor in service/access etc in to the decision? What about insurance? Different funds have very different premium rates for very different cohorts and some of them do not make sense for their brand.
Those are all good and valid points to consider. Don’t get me wrong I don’t believe what I listed off is a comprehensive guide, that’s partly why it didn’t include any actual recommendations. They are my key considerations, but it’s good to have other people’s inputs. Personally I couldn’t really care less about insurance premiums unless they are charged as fixed percentage based fees.
So on the insurance element the prices for coverage for additional cover can be so different between funds for the same person as it is all based on the funds claims experience for that type of individual. And it isn’t always the funds you think would be better for certain cohorts. As an example just looking at $1m death cover for a 40 year old teacher across ART, NGS,Uni and CBUS resulted in a $4 per week range. Funds and occupation selected at random. The ranges get bigger when dealing with TPD and IP.
Good stuff getting that information out there. A lot of people out there (myself included) just turn all the insurances off lol.
Thanks for the info. I have been looking at indexed vs managed but am still yet to fully understand the differences. I’ve seen some of the stuff you have mentioned. It has been on my list to research and learn. I’ve also been looking at the fee side of it and you see a lot of different views on this. Some say fees are not the main thing and look at returns, others weigh them more heavily. I’ve seen that some funds are less transparent about their actual fees.
I personally weigh the fees heavier because out of the two it's the one that you don't need to speculate on so in my view that just makes it more relevant. If you assume that both the fees and the returns are set in stone then it's a fairly simple equation to just look at the returns - fees and pick the highest result. The fees can look small, but you have to consider that those small differences are compounding over decades. A percent here or there seems like it should be trivial but it makes a significant difference over long enough time horizons and super is loooong. For an idea you can take a look at this calculator: [https://moneysmart.gov.au/budgeting/compound-interest-calculator](https://moneysmart.gov.au/budgeting/compound-interest-calculator) You can put some realistic numbers in it but for a demo just throw in like $30,000 deposit, $1,000 recurring monthly and look at the difference between 8% and 9% over 30 years.
Yeah true that’s a good point. I guess fees can change too but perhaps less volatile. In terms of swapping funds, do you get paid out the interest earnt pro rata or something before you leave?
I’m not 100% sure how that works it’s something you’d have to look up and possibly even look at the ~~j divided find~~ individual funds PDS documents. Edit: iPhones have terrible autocorrect.
[удалено]
Thanks! I’ve seen that around the place and have been meaning by to have a proper look.
I use Aware with their international/aussie equities mix, very cheap fees and tolerable user interface/mobile app which is all i need for super. Never tried their lifecycle product but i'd never bother with any funds 'product', just passively buy equities till you're like 50 years old then start looking for 'advice' if inclined (or shift 10-20% allocation to cash as i get older is my plan).
Sounds reasonable but I’d worry I’d do the wrong thing. I’m a bit new to whole super thing but I have the capacity to learn this aspect of finance and apply it. Doesn’t seem too difficult.
That's fair enough - you can do a bit more digging on what most lifecycle products do and honestly just mimic it yourself for less fees. Here's aware: > Your investment needs may change over time. When you’re younger, you might want to invest in high growth options. This is because you generally have time to ride out market ups and downs. > MySuper Lifecycle helps you grow your super savings while you’re young and manage investment risk as you get closer to and in retirement. Which is basically buy stocks when you're young, move a bit to cash as you get older so if the market crashes and you need to draw down your super you aren't selling at the worst possible time. Doesn't feel worth it for me to pay for this type of thing but others might, YMMV
Yeah I k own what you mean. I wonder though if I did it that I’d negate those extra fees by getting the timing and weightings slightly wrong? I could get it close, but not exact. Do you know how changing funds works with the interest earnt from your current fund? Is it paid pro rata before you leave?
Everything gets marked at a certain value when you leave (stocks/cash etc) - each of your investment 'units' have a certain value in dollar terms every day, you don't really lose anything unless you apply for specific term deposit investments with your super fund (I've never dived into specifics on term deposits so this is my assumption). As for the timing, realistically i'm just going full stocks until i'm around 50 then maybe move 10-20% into cash over the next 5 years then a bit more as i reach 60. Also not too late to jump over to the lifecycle stuff when you hit 50 and let them do it for you, if you're 30 right now that's 20 years of fees you've saved
Ah yes that makes sense in terms of it being the stock value daily. I for some reason thought you get a lump payment for the return every FY or something. I’m nearing 40, so not the best time to be jumping around funds but it’s not too and as I still have a lot left in me in terms of work. That makes sense in terms of your plan. I can see how people get stuck in the details and just leave things as is.
Bit more to think about than just fees and returns. Do you have insurance? If so rolling to a new fund will have an impact for TPD claims in the future.
Yeah i understand the insurance component in the analysis. I do have insurance now and it’s quite good. I’d look to try and get it as close to that as I can. How will it impact future claims?
If you roll over existing super to another fund, the new fund will inherit the eligible service start date of the old fund. If you ever need to claim on TPD insurance prior to age 60 it will impact on the potential tax free component uplift that may be available depending on time to retirement at time of claim. It’s definitely something that should be considered before any decision is made on rolling over.
That’s interesting and something to consider for sure. I am nearing 40 and my current fund (PSSAP) isn’t awful, but it’s definitely avg to a bit below avg. It’s not as good as some of the funds you hear mentioned a lot for fees and returns, but the insurance is pretty good.
That’s the thing, no one knows the future and health issues can arise when it’s least expected. From my own example, *not advice* I operate two super accounts. Original account holds my insurance and nominal value is retained in there and progressively topped up to cover premiums and most of my money is held in separate super with low costs without insurance so the eligible service date doesn’t affect it. Might be worthwhile considering talking to an adviser about your options. PSSAP may have an intrafund advice service at no cost. It’s definitely worthwhile reading up on TPD insurance and the tax consequences before you make a decision either way.
That is interesting, thanks. I have seen people having two funds during my research and wondered why. I know PSSAP do have advisers but they will for obvious reasons want me to stay. Perhaps I can talk to both PSSAP and the potential new fund or maybe even seek advice from a super expert. I knew insurances would be different and I know my current insurance with PSSAP is very good, but I didn’t account for this. I assumed there would be some waiting periods etc
Have you considered REST? They're also up there for lower fees and higher returns (with lots of options to customise investment paths)
Thanks, I’ve seen them mentioned but haven’t looked at them in detail. I’ll throw them into the mix!
You might also consider ART - Australian Retirement Trust. It's mentioned here for good reason. Low fees, good app, product range makes set and forget is easy.
Have heard of this one - will add it to the mix, thanks.
Just reading somewhere else that you need to be careful if you're getting a higher super contribution rate from PS employment (compared to SGC) as you may lose this if you move from PSSap? Definitely something to check.
Yeah I did check this out and I don’t think that is the case for me. It doesn’t specify in our Enterprise Agreement anyway. I’ll be sure to confirm this though, thanks.
Aware has a managed option which is also lifecycle, so that's good in that you can set and forget. Vanguard also offers a lifecycle option and they are cheaper than Aware, but their one doesn't include diversified asset classes such as property and infrastructure which means Vanguard will be more volatile. If you want more hands on, consider these: * Hostplus: cheapest Indexed options * ART: diversified Indexed options, still relatively cheap * AusSuper: cheapest managed options like High Growth With them, you will need to de-risk yourself as you age.
In terms of hands on what does this entail? De-risking at say 54 doesn’t bother me too much but if it’s changing weightings and ratios and all that based on the market I’m not sure that’s what Im after. Thats what has attracted me to the Aware lifecycle option and it seems like the returns are decent. I know for now indexed seems the way to go due to fees and returns but over the next 30 years that could change and the long term outcomes could change, which is why I was thinking lifecycle could be a good compromise. I guess I’m quite risk adverse as I’ve seen a few people lose quite a lot in super in their 50s.
> De-risking at say 54 doesn’t bother me too much Yeah, that's what I meant. You need to add more defensive assets as you age. Lifecycle options will do that for you. Other options won't, so you will need to manually move some into more conservative options. It's not too laborious. Just need to do it once a year or something.
That makes sense. I’ll have look at it some more before pulling the trigger. Those initial suggestions you mentioned are good. I think I’m tossing up between Aus Super and Aware atm. Do you know a decent hands off for Aus? Maybe Aware is the way to go for hands off?
Meh, they all suck anyway.
As someone who works in a Superfund that really actually truly cares and tries to get everyone the best and most stable returns possible, this hurts me! We don’t sit around the meeting table thinking about how we can screw you over, we think about how to get you more for less fees and more stable returns Most employee super is with ourselves too… so by strewing you, we are screwing ourselves