Opinion
The three-step check to see if you’re in a good super fund
Nicole Pedersen-McKinnon
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Today, I want to tell you a – frankly embarrassing – story about lost super.
I don’t mean the kind you often hear about, where you’ve simply lost track of it (you can check if you have some money languishing somewhere, on the ATO section of your myGov).
No, we’re talking the type of super that’s gone. That has dwindled until it’s disappeared. Because it happened to me.
Follow my checklist to see if your super fund is a good one.Credit: Michael Howard
Though I’ll ‘fess up that – at the time – I was pretty clueless, the fund shall remain nameless. But it had three characteristics that dreadfully, expensively caught me out.
One: My employer had chosen it for me – indeed, there was no picking your own back then. I have subsequently heard stories about employers moving their entire staff’s super money back then to secure for themselves a better deal on banking…
Two: It had poor performance – not that I knew at that stage how to check. And
Three: It had high fees (but let me come back to that).
What’s the problem?
That perfect super storm saw years of the contributions I earned from age 15 as a spring, working-the-checkout chicken, evaporate.
What you can do about it
So, let me explain how to ensure this never happens to you … because pretty soon you are going to have your financial-year fund results to do it. Here’s my 3-step check to make sure you’re in a good super fund.
Step 1: Pit your fund’s performance against the best
The official results are in and in 2024-25 the median balanced super fund (those with between 60 per cent and 76 per cent invested in growth funds) made members 10.3 per cent, says SuperRatings.
That’s huge. And remember what a wild ride the markets were?
But the best – Raiz Super Moderately Aggressive – returned 13.8 per cent. And a raft of funds put on around 12 per cent, in descending performance order: legalsuper – MySuper Balanced (12.6 per cent), Hostplus – Index Balanced (12.6 per cent), Colonial First State First Choice Wholesale Personal – Enhanced Index Balanced (12 per cent) and Vanguard Super SaveSmart – Growth (11.8 per cent).
However, before you immediately ditch and switch, it’s a bad idea to judge investment performance over just one year – you need solid performance every year.
Over three years, the median balanced fund made 9.5 per cent a year.
And the top five? Hostplus - Indexed Balanced (12.2 per cent), Raiz Super − Moderately Aggressive (12.1 per cent), ESSSuper − Balanced Growth (11.9 per cent), Brighter Super – Balanced (11.1 per cent) and Acclaim Super − AMG Index Growth (10.7 per cent).
Even that is not performance pedigree back far enough, though – over 10 years, including the pandemic-panic era, your median-fund benchmark is 7 per cent a year.
So, first step: check your statement to see if your fund measured up.
Step 2: See if you’re paying too much in fees
Now, back when I lost my super, large fees could be levied on low balances too – that’s really how my money vanished.
Thankfully, fees on accounts worth less than $6000 are now capped at 3 per cent, in a move designed to prevent excessive fees eroding small super balances.
But you may still be paying them on your own super fund.
SuperRatings tells me the average fee on $50,000 held in a balanced super fund is $530. That’s made up of a member fee (an average $95), admin fee and investment fee, and equates to just over 1 per cent.
If you are paying higher, are you getting commensurately higher performance?
Answer “no” and it’s another red flag for your fund. Which leads me to…
Step 3: Choose a fund based on YOU
We’re been talking about balanced funds because this is what you’ll usually have if you didn’t tick the fund-type box.
I said that you now have choice of super manager … but you have always had choice over your asset split – how that manager invests your money.
And that’s crucial. Broadly: the younger you are, the more risk you can afford to take and therefore the more money you might invest in growth assets like shares.
You stand to make – and potentially lose – more. But the idea is that the farther you are away from needing the money, the more time you have to recover any losses.
The median growth fund, those more heavily invested in shares at between 77 per cent and 90 per cent, returned 11.4 per cent, versus the 10.3 per cent a balanced fund made, in the past year.
Over three years, growth funds recorded a gain of 11 per cent a year versus balanced funds’ 9.5 per cent and, over 10 years, 8.1 per cent against 7 per cent.
Yet SuperRatings says balanced funds account for approximately 55 per cent of simple, or MySuper, products … many of which will belong to younger people.
Choose your own fund – your needs are different to the person at work who might sit beside you.
And a fund with high fees and low performance could really cost you. Trust me.
Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me, available at www.nicolessmartmoney.com. Follow Nicole on Facebook, X and Instagram.
Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.