Five ways to check if your super fund is retirement-friendly (2024)

As we explore the idea of retirement, for many, it’s the first time they have really become familiar with their superannuation fund’s services, and what they offer to help you navigate this huge step in life.

Pre-retirement is the time that many people might start to think about what they want from a super fund as they arrive at the retirement stage and start assessing whether their fund is committed to looking after their customers and helping them navigate this stage of life.

The goal of a superannuation fund in the retirement phase is to generate strong investment returns and structure its products to pay members an income they can rely on to live out their whole life. They also have an important role to play as your primary source of information about how to use that money you’ve saved for decades.

So today, let’s look at the five things I would evaluate in a superannuation fund to understand if it is really retirement-friendly.

Investment returns

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This is a no-brainer. We rely on our superannuation funds to generate a strong, diversified income stream that we can rely on. Assessing your super fund’s breadth of investments in listed and unlisted assets, and benchmarking their returns in retirement is not easy, but it’s important.

There is no publicly available national benchmarking of funds like the government’s MySuper offers for accumulation funds, but I’ve sourced information on the top ten retirement-stage fund’s investment performance, across both the balanced and the growth categories on my website.

Remember to consider firstly whether your fund is in the balanced or growth profile (make sure you compare apples with apples), then assess whether it is performing in line with the best performers in the market, ideally looking at 10-year performance metrics as the important number rather than just the 1-year performance.

Products within super that support living a longer-than-average life

As we live longer and want more certainty about having enough income for our whole lives, superannuation funds are starting to evolve and offer a range of products called market-linked longevity products that offer a fixed income that is guaranteed for life built in.

It’s worth a look if you think you might live longer than the average Joe. Some superannuation funds are well ahead of their competitors in this space, with funds like Australian Retirement Trust – QSuper, offering a product called Lifetime Pension, and AMP offering the MyNorth Lifetime Income Account.

Other funds can offer you these types of products via external providers, like Generation Life and Allianz.

Fees

A superannuation fund that generates high returns for their retirement-phase customers can still be an underperformer if they claw back their returns in high fees. So, it is important to assess the administration fees you are paying your fund.

The best way to do that is to add together all your fund’s administration fees and then divide them back into a percentage of the balance in your account and check how they sit against the average.

Some fees charged by funds are charged as a standard dollar amount, regardless of your balance, so, in most cases, the larger your balance, the lower your percentage should be.

Again, this is an area without public benchmarking, but research house Chant West reviews the administration fees on pension phase funds in Australia each year, and says that average fees on the top 10 funds over 10 years range from 0.1 per cent to 0.35 per cent on a balance of $250,000, the average balance for Australian super funds at retirement today.

Financial advice

The biggest problem Australia has right now is a lack of financial advisers who can offer the enormous number of retirees financial advice on how much they can afford to spend in their retirement years for an accessible price. And retirees, who are afraid of overspending and running out of money are living more frugally than necessary because they cannot or choose not to seek out advice.

It’s worth asking your fund about financial advice. Some offer limited financial services for free, or wider services for a fee.

Guidance, calculators, retirement literacy and education

This is an area I think is increasingly important. Pre-retirees facing retirement in the future need to become better at understanding how this stage of life works, both financially and from a lifestyle perspective so they can plan, review and monitor their own spending and self-manage the process of living their best life.

The best retirement-phase super funds really understand this and are doing great things. Some are offering online education programs, seminars, and a myriad of calculators and tools on their website. Others, like Telstra Super, and UniSuper are pairing this with a free phone-based guidance service, where real people help you to use their self-help tools like calculators on their website.

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Independent research firm Chant West called out three funds in their Pension Fund of the Year category, Australian Retirement Trust’s (ART) QSuper, TelstraSuper and UniSuper for their progressive work in evolving their products and services to support the retirement phase. But they’re not the only ones doing good things.

As more people approach retirement, some funds are becoming keenly interested in helping their pre-retirees navigate this crucial stage. Have you checked what your fund is doing?

Bec Wilson is author of How to Have an Epic Retirement, which is now available online and in all major booksellers. She writes a weekly email newsletter for pre- and post-retirees at epicretirement.net.

• Advice given in this article is general in nature and 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 circ*mstances before making any financial decisions.

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