Should you Move from Your Industry Fund?

Many Australians cling to their industry super in the often-false belief that industry super funds are always cheaper than other superannuation options in the market, which is not correct.

Whether an industry fund is your best choice of superannuation vehicle depends on your stage of life, how much you have in super and whether you want to take advantage of the low-cost risk insurance some industry funds provide.

Certainly, if you are starting out, have a low superannuation balance and want insurance protection to cover your home loan and young family, an industry super fund may well be the right answer for you.

However, if you are an older Australian nearing retirement age or have a significant balance in super, the right answer may be completely different.

Industry super funds tend to charge most of their fees on a percentage basis and there can be significant ‘hidden’ fees imposed by fund managers employed by the industry fund to invest your money.

This means while your superannuation balance is low, they can be a cost-effective solution, this advantage fast disappears as you grow older and your superannuation savings accumulate.

As you near retirement it is likely you will need access to all the bells and whistles modern retail funds can provide you. I usually liken this to home loans.

Forty years ago, all home loans were much the same. You repaid the interest and an increasing amount of the capital and thirty years later you owned your home.

These days with the advent of fixed interest rate, variable interest rates, offset accounts, etc., no two home loans are identical. So, it is with superannuation funds.

As you near retirement you will want a super fund that is easy to deal with and can provide easy access to important features such transition to retirement pensions, account-based pension and should you need to the ability to make downsizer contributions.

As a result, Australians are making the comparison and find retail super funds offered by platforms such as Netwealth, HUB 24 and DASH are cheaper and better suited to their needs.

They also allow you to employ a financial planner who can advise you on your best investment options and proactively manage your funds for you while you focus on how best to spend your money in retirement.

Speak to us if you’re unsure.