Most Australians end up in a super fund by default — through their employer or their first job — and never actively choose one. Yet the difference between a good fund and a poor one can amount to tens of thousands of dollars over a working lifetime, through the compounding effect of fees and returns.
You have the right to choose your own super fund in most employment situations. This guide walks through five key factors to evaluate, plus what to do if you’re happy to stick with an employer default.
Step 1 — Compare Fees
Super fund fees are the single most controllable variable in your long-term super outcome. Unlike investment returns — which are uncertain and vary year to year — fees are charged regardless of performance.
Types of Fees to Check
| Fee Type | What It Is | How to Find It |
|---|---|---|
| Administration fee | Fixed dollar amount or % of balance for managing your account | Fund PDS or annual statement |
| Investment fee | % of balance charged by the investment manager | Fund PDS |
| Indirect cost ratio (ICR) | Costs embedded in the investment option (not directly charged) | Fund PDS |
| Advice fee | Charged if you use the fund’s financial advice service | Only if you use the service |
| Buy/sell spread | Cost when money moves in or out of an investment option | Fund PDS |
The most useful single comparison figure is the Total Cost Ratio (TCR) — the combined cost of administration fees, investment fees, and the indirect cost ratio, expressed as a percentage of your balance. APRA now requires funds to disclose TCR for each investment option.
Fee Benchmarks
| Fund Type | Typical Total Fees (% of balance) |
|---|---|
| Industry fund (default option) | 0.5% – 1.0% |
| Industry fund (index option) | 0.1% – 0.5% |
| Retail fund (actively managed) | 1.2% – 2.0% |
| SMSF (per fund, all costs) | Equivalent to ~1.5–3% on small balances |
The Dollar Impact of Fees Over Time
On a $100,000 balance over 20 years (assuming 7% gross return before fees):
| Annual Fee | Balance After 20 Years |
|---|---|
| 0.3% | ~$343,000 |
| 0.8% | ~$310,000 |
| 1.5% | ~$270,000 |
| 2.0% | ~$248,000 |
The difference between a 0.3% fee fund and a 2.0% fee fund is approximately $95,000 over 20 years on the same starting balance — without any additional contributions.
Step 2 — Look at Long-Run Performance
Short-term returns are largely meaningless for super — markets fluctuate year to year, and the best-performing fund in one year is rarely the best in the next. What matters is long-run net returns (after fees).
What to Look For
- Compare 5-year and 10-year net returns for the same investment option category (e.g. balanced vs balanced)
- Use APRA’s YourSuper Comparison Tool (available at moneysmart.gov.au) to compare MySuper products on a like-for-like basis
- Check the APRA Annual Superannuation Bulletin for fund-level data on returns and costs
- Be cautious of funds that market their 1-year return — short-term performance can be misleading
The APRA Performance Test
APRA runs an annual Superannuation Performance Test that identifies chronically underperforming products. Funds that fail the test must notify their members. From 1 July 2024, the test covers both MySuper products and trustee-directed (choice) products.
If your fund has failed the performance test, you will have received a letter. This is a strong signal to review your options.
Past performance is not a reliable indicator of future performance. Comparison of historical returns does not guarantee a fund will perform the same way in future.
Step 3 — Review the Insurance
Super funds typically provide automatic group insurance cover: life insurance (death cover), total and permanent disability (TPD), and income protection. The cost and quality of this insurance varies significantly between funds.
What to Check
- How much cover do you automatically receive? Check your fund’s PDS or your member statement
- How much does it cost? Insurance premiums are deducted from your super balance — higher premiums erode your balance even if you never claim
- What is the definition of TPD? “Own occupation” cover (you can’t do your specific job) is generally more favourable to the member than “any occupation” cover (you can’t do any job)
- Is income protection included? Some funds include income protection automatically; others require you to apply
If you have personal insurance policies outside super, doubling up may mean you are over-insured and paying unnecessary premiums. Conversely, if you have dependants and no other cover, the automatic super insurance may be the cheapest way to maintain meaningful cover.
Step 4 — Check the Investment Options
The fund you choose needs to offer investment options that match your situation. Consider:
- Does the fund offer a growth or high-growth option if you have a long time horizon?
- Does it have a low-fee index option if you prefer passive investing?
- Does it offer ethical/ESG investing if that matters to you?
- Does the default option (MySuper) suit your age and risk profile?
For detailed guidance on investment options, see Super Fund Investment Options Explained.
Step 5 — Consider Your Employer’s Default Fund
Many employers have a nominated default super fund, and employer-paid contributions must go to your chosen fund (under the Superannuation Guarantee rules). Since 1 November 2021, employees who already have a super fund from a previous job are stapled to that fund — new employers send SG contributions there automatically unless you nominate a different fund.
If you don’t have an existing super fund, check whether your employer’s default fund is competitive — if it is among the top performers for fees and returns, sticking with it is a reasonable starting point.
Quick Reference — Super Choice by Age
| Age Group | General Considerations |
|---|---|
| 18–35 | Long time horizon — fees and growth option typically matter more than short-term volatility |
| 35–50 | Balance between growth and reviewing insurance needs as responsibilities (mortgage, family) grow |
| 50–60 | Review investment option as retirement approaches; consider transition to retirement options |
| 60+ | Consider switching to a more defensive option; review withdrawal strategy and Age Pension interaction |
These are general considerations only — not personal advice. Your individual circumstances, health, income, and risk tolerance all affect the right approach for you.
How to Switch Super Funds
If you decide to change funds:
- Open an account with the new fund (most funds allow online applications)
- Provide your employer with your new fund’s details (BSB, account number, member number) — they must direct future SG contributions there
- Roll over your existing balance to the new fund using the ATO SuperMatch tool via myGov, or directly through your new fund’s portal
- Review insurance before rolling over — once your old fund account is closed, any automatic insurance cover in that fund ends. Ensure you have cover in the new fund before closing the old account
For a step-by-step walkthrough, see How to Consolidate Your Super.
Frequently Asked Questions
Do I have to choose a super fund? No — if you don’t choose, your employer will use their nominated default fund, or (if you have an existing super account from a previous job) contributions may go to your existing fund under the stapling rules. But actively choosing means you can select a fund that best fits your needs.
Can my employer force me to use their super fund? No. Under the Superannuation Guarantee rules, you have the right to nominate any complying super fund to receive your employer’s SG contributions. Some awards and enterprise agreements specify a default fund, but you retain the right to nominate a different one.
Is an industry fund always better than a retail fund? Not necessarily — but industry funds have historically outperformed comparable retail funds on a net-of-fee basis over long periods, partly because they are run on a not-for-profit basis. APRA data consistently shows many retail funds with higher fees and lower net returns. However, individual fund performance varies, and the best fund for you depends on your specific investment option, insurance needs, and balance.
How often should I review my super fund? At minimum, review your super once a year — check contributions are being received, fees are reasonable, and your investment option still fits your timeline. Major life events (new job, marriage, having children, approaching retirement) are good triggers for a deeper review.
For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.