Retail Funds
Retail funds are funds that have been established by a bank, life office, financial planning dealer group or fund management group. Retail funds are usually open to the public. They are an alternative for employers who do not wish to run their own fund or be part of an industry fund. Therefore a master trust fund, which is a type of multi-employer retail fund, can be set up instead.
Retail funds tend to invest predominantly in the Australian and overseas stock markets.
Personal Super funds
Personal super funds are funds that are available to individual consumers. They are mainstream retail super funds and are often further categorized into personal master trusts and personal divisions of not for profit funds.
Advantage
A broad menu of investment options can be accessed similar to that of managed funds but without the high tax rates.
Disadvantage
Unlike industry super funds, adviser commissions are paid (which are rebated by 2020 DIRECTINVEST).
Master Trusts
Master trusts pool accounts for investment and have single corporate trustees and trust deeds that allow many individuals and companies to participate. They are offered to the public by life insurance companies, trustee companies and other financial services providers.
Advantage
Master trusts offer various benefits, such as death, total and permanent disability and salary continuance benefits which are often provided by related life insurance companies.
Disadvantage
Individual members may have lesser control and flexibility due to the nature of regulated master trusts which are subject to the federal prudential requirements.
Industry Funds
Industry super funds are multi-employer funds operated by parties to industrial awards, usually employer associations and unions. They primarily offer services to members of a specific industry, such as retail workers, hospitality workers and builders.
Advantage
All profits made are returned to members’ accounts, rather than paid to shareholders. Lower fees are involved with no commissions paid to the financial adviser.
Disadvantage
Investment options may be more limited compared to other super funds.
Public Sector Funds
Public sector funds provide superannuation for employees in the public sector. They are run and structured with the same benefits as industry funds, and include funds established for public servants and for employees of statutory authorities and local Government.
In Australia, the Commonwealth government has set up statutory superannuation funds for its public servants, such as the Commonwealth Superannuation Scheme, the Public Sector Superannuation Scheme and the Military Superannuation and Benefits Scheme.
The schemes provide generous death and invalidity benefits. It may also be possible to obtain salary continuance insurance cover.
Retirement Savings Accounts (RSAs)
Retirement savings accounts are established for holding superannuation savings. They operate much like bank accounts, except where restrictions apply upon withdrawals like regular superannuation accounts. They are run for profit by financial institutions such as banks, building societies, credit unions or life insurance companies.
Advantage
They are low-risk products and may have lower levels of fees and charges compared to regular super funds. Many accounts may also include death and disability insurance benefits.
Disadvantage
Super savings are invested into bank deposits and therefore usually pay lower rates of interest than regular super funds, resulting in lower rates of return.
Self Managed Funds
Self managed super funds are also known as excluded or do-it-yourself funds because they can have up to four members and are generally established by an individual or a family from their own superannuation savings. Members of the fund must also be trustees, unless a corporate trustee is appointed, and are responsible for the all investment and compliance decisions of the fund, including administration, trusteeship and taxation. More information on self managed superannuation.
Advantage
Managing your own super can offer greater control and stability.
Disadvantage
Self-managed funds can become very costly to run and all members are held responsible for their decisions, such as where legislative compliance is concerned.
Employer Funds
Employer-sponsored super funds are funds that have been established by employers for their own company for the benefit of employees. Employer funds have their own trustee body charged with the particular responsibility for the fund. These trustees are usually derived from the employees of the organisation and therefore the trustee boards are made up of equal numbers of employer and member representatives.
Employer super funds include corporate funds, government funds and industry funds.
Advantage
Employer funds often have generous benefits, such as compulsory member contributions and death and disability benefits that are calculated in the same way as full retirement benefits. Fees, charges and insurance benefits are often subsidised by the employer or through fund surpluses.
Disadvantage
Changes to corporate funds in regards to prudential requirements and taxation rules have become more and more complex.
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