Whether you’re starting a new job or looking to change super funds, there are many reasons why you might want to open a superannuation account. If you want to know how to create a super account, you’re in luck.
Below, we’ve put together a simple guide on how to open a super account including what types of funds there are and what to consider when comparing options.
Types of super funds
Understanding the different types of super funds can be handy in deciding which one is right for you. Generally, there are five types of super funds: industry funds, retail funds, public sector funds, corporate funds, and self-managed super funds (SMSFs).
Industry super funds are not-for-profit meaning the profits are returned to the fund to benefit its new and existing members, rather than its shareholders. This type of fund was started by trade unions and industry bodies to ensure its members had retirement money. While there are still some today that only cater to specific industries, most industry funds are open to anyone. Some examples include AustralianSuper and Rest.
Retail super funds are for-profit funds that are usually run by banks, investment companies, or other types of financial institutions. The company running the fund aims to retain some profit which is generally split between its members, shareholders, and financial advisors. Examples of retail funds include ING Living Super, MLC Super (owned by NAB), and OnePath Super (owned by ANZ Bank).
Public sector funds
Public sector super funds (also known as government funds) are set up for federal or state government employees. However, some of these funds are open for anyone to join. Generally, public sector funds come with low fees and some employers contribute more than the 9.5% minimum set by the government.
This type of super fund is organised by an employer to offer superannuation for their employees. Some corporate funds operate under a board of trustees, while others might operate under a retail or industry super fund.
Self-managed super funds (SMSFs) are funds managed by individuals (trustees) themselves. They are regulated by the Australian Taxation Office (ATO) and must follow legal and compliance obligations. While anyone can set up a SMSF, it’s important to consider the costs, which tend to be high, as well as the benefits and risks involved.
How to compare super funds
According to MoneySmart, the factors to consider when comparing super funds include performance, fees, insurance, services, and investment options. Let’s have a quick look at each below:
|Fund performance||When comparing super funds, you want to look at the fund’s performance. In particular, you want to look at their three- and five-year performance.|
|Fees||Ideally, you want to look for a fund with low fees. There are different types of super fees including administration, insurance, investment, transactions, and personal advice fees. MoneySmart has a handy superannuation calculator that lets you see how much fees will impact your final super balance.|
|Insurance||There are three types of insurance super funds offers: life insurance (also known as death cover), total and permanent disability (TPD) insurance, and income protection. Have a look at what your fund offers including the amount of cover and inclusions/exclusions.|
|Investment options||There are many funds that let you choose the investment strategy. Generally, the options include growth, balanced, conservative, ethical, cash, and MySuper.|
|Services||Some super funds offer services such as financial advice but they do come with fees. Keep an eye out for this when comparing funds.|
How to open a super account
For most Aussies, super begins when you get your first job. Generally, most people can choose the fund they want their contributions to go to. However, there are some circumstances in which you may not be able to choose your own fund. This can include workers who are covered by industrial agreements or are members of defined benefits funds. If you don’t choose a super fund, your employer will nominate a fund for you.
A quick rundown of super in Australia:
- According to the ATO, you are entitled to super contributions from your employer if you are 18 years of age or older and paid $450 or more (before tax) in a month
- If you are under 18 years of age, paid $450 or more in a month, and work more than 30 hours per week, you are entitled to super contributions from your employer
- Under the superannuation guarantee, employers must contribute 9.5% of your ordinary time earnings towards your super (up to the ‘maximum contribution base’)
When you start a new job, your employer will give you a superannuation standard choice form to fill in. Some of the things you’ll need for the form include the preferred super fund’s:
- Australian business number (ABN);
- Superannuation product identification number (SPIN);
- Phone number.
While it’s not a legal requirement, providing your tax file number (TFN) will make sure your super contributions are taxed at the lower superannuation rate and you don’t miss out on extra contributions.
What if I want to switch super funds?
If you’re looking to change super funds, the process itself is quite simple. All you need to do is log into your MyGov account or fill in a rollover form and send it through to your transferring or receiving fund.
What if I’m self-employed?
If you’re self-employed, it’s up to you whether or not to make super contributions yourself. However, you might want to consider it to ensure you have a solid retirement nest egg. Check with your super fund if you can make contributions yourself. Plus, keep in mind that you’ll need to have a TFN for your fund to accept super contributions.
Find out more about super Discover our latest articles on all things superannuation.
Find out more about super
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Oiyo is a consolidated online resource, we are not financial advisors. We work with a range of industry professionals and compliance check our articles to ensure factual accuracy. However, we do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented in this article relate to your unique circumstances.