More than half of the superannuation accounts in Australia are invested in a product known as ‘MySuper’. While there are similarities between the MySuper products offered by various super funds, there can also be some differences that are worth being aware of, especially if you are comparing them to find the right one for you.
What is MySuper?
MySuper is the default investment option that is offered by many (but not all) superannuation funds. In other words, if you or your employer have opened a new account with a superannuation fund and you haven’t chosen an investment option, your super is probably invested in the MySuper product of that super fund.
Your super fund will also offer a number of other investment options, which are collectively known as ‘choice’ products. As the name suggests, these are products that super fund members can actively choose to invest in, depending on factors such as their investment time horizon, tolerance for risk, etc.
There are lots of choice superannuation products available in Australia, because they are designed to meet the varied needs of individuals who want to make an active investment choice. On the other hand, MySuper products are generally designed to be suitable for a broad range of members, especially those who are happy to let their super fund choose how their money is invested. There are not nearly as many MySuper products to choose from, but there are still a lot of options out there. Read on to find out how to compare them, so that you can work out which one that’s right for you.
Comparing MySuper products
Every super fund with a MySuper product, will have a MySuper dashboard on their website. You can find our MySuper dashboard here. Each dashboard must contain the following information (although the way in which it’s communicated will vary from fund to fund):
- The return target,
- Returns for the past 10 years (annual returns and the average return over this period),
- The level of investment risk, including the numbers of years that negative returns are likely in an average 20 year period, and
- The total annual fees and costs that a member with a $50,000 balance will pay.
Additional things to consider
While MySuper dashboards can help you compare the MySuper product offered by various funds, there may be a few underlying differences that are worth being aware of. Otherwise you might think you are comparing apples with apples but these differences mean that you might be comparing apples with pears, without realising it!
The first thing to consider is that different MySuper products have varied levels of risk, often based on the profile of the members of each super fund. For example, a super fund with a lot of young members might have a MySuper product with a higher level of risk, because their members have a longer investment time horizon. Typically, the more risk you take, the higher the returns you will get, but the more likely those returns could vary significantly year to year. On the flip slide, a super fund with members who are generally older, may have a more risk-averse MySuper product, because their members are closer to retirement and value more stable returns, even if they are slightly lower than other funds.
The second thing to be aware of is that there is no standard definition for growth and defensive assets. This means that two super funds might have a MySuper product with a 70%/30% growth/defensive split, but they might still have a very different risk profile if one fund is more conservative with the way they classify their investments.
The final thing to think about is how your super fund is investing your money, not just what returns you are getting each year. If ethical investing is important to you, you might want to check out the Responsible Returns website, which can help you to find responsible or ethical banking, superannuation and investment products that match their values and interests. While there are more than 100 MySuper products to choose from, Christian Super is one of only 3 MySuper products that have been certified by the Responsible Investment Association Australasia (RIAA).*
If you currently have a MySuper account, and you’re happy with the way that your super is invested, then there is nothing that you need to do!
If you’re looking for a new superannuation fund or thinking about moving your super to a new fund, you might like to download our free guide called ‘5 tips to help you choose the right super fund for you’.
If you have further questions, our friendly Member Care Team are always happy to help. Click here to contact us.
Disclaimer: The content of this article includes advice that is general in nature and does not consider your personal situation. Christian Super encourages all people considering their options in retirement planning to seek out qualified professionals who can provide specific personal advice.
* Source: The Responsible Returns website.