Industry super funds are one of the different types of super funds in which you can invest to build your retirement nest egg. Most super funds fall into one of the following categories:
Typically, industry funds are accumulation rather than defined benefit funds (the distinction can have a major impact on how your retirement benefits are calculated). In terms of fees, industry super funds tend to range from low cost to medium cost, and many don't pay commissions to financial advisers. Historically, on average, industry funds have recorded higher returns and have tended to charge lower fees than other types of funds. Most will offer MySuper products, which are the default, low-cost account type you will be assigned to if you don't nominate a preferred investment option.
All super funds rely on a strategy of diversification to grow your balance. Our guide on diversification is easy to read and helps you understand how your money is being invested. Suitable investment strategies for your super will often change depending on your age. If you would like to know more about portfolio diversification strategies check out our age specific guides. If you have a decade or more left in your career, download this guide. If you’re closer to leaving the workforce and planning to retire download this guide.
Industry super funds operate on a not-for-profit basis, and are not owned by a bank or investment company that might seek to retain some profit from the business. Unlike industry funds, retail super funds are obligated to satisfy shareholders and investors, and pay them a portion of the profits rather than investing them back into the fund to benefit the membership. This can affect the returns members ultimately receive. For industry funds, all profits are reinvested back into the fund for members.
As such, with an industry super fund, you could enjoy better terms when it comes to returns, fees, and charges. Additionally, historical average returns of industry super funds tend to be higher over the longer term than retail super funds. Reinvested profits, lower fees that minimise balance erosion, and higher returns essentially mean you are more likely to have more benefits available - possibly tens of thousands of dollars or more - in retirement.
Industry super funds have substantial investments in unlisted assets, such as infrastructure. Indirectly, your super may boost the Australian economy in helping to create jobs and building roads, airports, bridges, and public transport - while providing security through diversification and generating an attractive return for your retirement nest egg.
Most industry super funds are open to anyone, but some smaller funds might only accept you as a member if you work in a certain industry, such as health or a trade. The best way to know for certain is to contact the fund.
Historically industry super funds were started to serve members working in specific industries. For example, some of the biggest industry funds in Australia are focused on sectors like construction and building, healthcare and community services, hospitality and retail, or motoring and small business. We have industry super funds that were founded for professional services; non-government education and community organisations; print, media, entertainment and arts; or the transport sector. Others specialise in the energy, maritime, legal, or real estate sectors. Today these funds might still have a majority of their members working in a specific sector, but in most cases, they are open to members from other industries.
Should you join an industry super fund for an industry that's different from the industry in which you work?
Industry super funds can offer numerous advantages, especially since they operate on a not-for-profit basis. As long as you have determined the product offerings, returns, fees, and conditions fulfil your requirements, there is no reason why you shouldn't join a fund that was originally started for members working in a different sector to your current one. It is important to note you won't be disadvantaged by joining a fund that was initially founded for a different occupation or industry.
Further, given their higher long-term average returns compared with retail funds, joining an industry super fund could potentially give you access to higher returns, lower fees and charges, and good insurance cover. Assess the fund like you would any other fund, by reviewing performance over at least the past five years, fees, services, insurance, and investment options.
If you’ve decided to join an industry super fund, rest assured the process of joining or switching is fairly straightforward and can be done in under an hour. You will need to apply to become a member before notifying your employer or transferring any super you have with another fund.
Make sure you review your super at least once a year, as you would with super invested with any type of super fund. Things to check for when managing your super include:
* Selecting Super, Personal Super Top 10 for Fees 30 October 2019.
Do you have more questions about joining an industry super fund? EISS Super is managed by genuine people protecting your super, and we are with our members for the long haul. We are committed to helping you see your future clearly and can assist you with your query whether it’s finding a super fund or transferring to us as your new super fund.
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