What's an industry super fund?

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:

• Industry super funds - Industry super funds are a type of members-owned fund run only to benefit its members. Historically they were only open to people working in a specific sector or industry, however today many industry super funds accept members from any occupation. As profit to member funds, they place emphasis on reinvesting profits for the benefit of members through lower fees and improvements to products and services.
• Retail super funds - These funds are typically managed by funds or investment companies, and membership is open to anyone. Retail funds are associated with a wide variety of investment options. These funds often pay fees and commissions to financial advisers.
• Public sector super fund - These funds are usually open to government employees only, and they tend to offer a narrower range of investment options along with low fees. With a public sector fund, profits are returned back to the fund.
• Corporate super funds - These funds are managed by specific employers for their employees. For example, a large company might operate its own corporate fund available only to their own workers. Funds in this category may have broader varieties of investment options and range from low to higher cost in their fees and charges. Generally, profits are reinvested in the fund.
• Self-managed super funds (SMSF) - These are set up and run by private individuals for their own super. You can have up to four members in a SMSF, who might be friends and family. This type of fund gives you complete control, but they can be costly and riskier to run. A relatively substantial balance is required to make this a viable option.

Fees and performance

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.

What are the benefits of an industry super fund over traditional super funds?

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.

Who can join an industry super fund?

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.

Applicable industries

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.

How to join an industry super fund

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.

• Complete form - Choose your fund and complete a membership application form to get started. You can usually complete and submit the form online. You will need to have details like your Tax File Number, employer's details, and driver's licence on hand.
• Employer notification - Once you’ve joined the new fund, let your employer know the details. Your employer will provide you with a 'standard choice' form, which gives them all the details they need to start paying your super into your new fund.
• Rollover super – You’ll likely want to transfer any super you have with another fund to avoid paying duplicate fees and charges. Usually you can do so by completing the relevant form on your new fund's website or through your MyGov account. Your fund will then take care of the rest. You might be able to rollover your super using the same form you use for applying for a new membership. Before you do, review any features or products you will lose with the switch. This could be insurance cover such as life, total and permanent disability, and income protection. Where necessary make alternative arrangements to replace the cover.

Ready to combine your super accounts?

How to manage your industry super 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:

• Investment strategy - Your super might be invested in options like conservative, balanced, or growth. A conservative option has lower risk but tends to provide lower returns than a growth option, whilst a balanced investment strategy offers a level of risk and returns in between the two. Check that you’re happy with your super investment strategy, and if not, consider changing as is appropriate for your life stage, goals and comfort with risk.
• Insurance - Does your super include insurance? Review your cover on a regular basis and check you’re still getting good value for what you’re paying and that you’re covered for the work you do (especially if you work in a high risk occupation). Make sure your nominated beneficiaries are up to date. Want to know what types of insurance you could be covered for? Use our Insurance Calculator to find out the cover you need.
• Fees and charges - How much are you paying in fees and charges? Ensure you understand what you’re being charged and consider whether you are paying more than you need to. If you think your fees might be too high, it might be time to think about switching to a more competitive super fund. Did you know that EISS Super offers their members one of the lowest fees* available compared with other super funds?
  
  

* 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.