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Industry super funds are now a big part of the Australian superannuation market, but what makes them different and how do they compare to other types of super fund? Find the answers you’re looking for with this comprehensive guide.
Industry superannuation funds are one of several types of super fund available to Australian workers. Industry super funds were originally set up specifically to service specific industries (hence the name), but most are now open to the general public.
In 1991/92, the Australian government introduced what’s called the “Superannuation Guarantee”, which made it a legal requirement for your employer to pay a portion of your wages (initially 3%, now 9.5%) into a super fund. At the time, both unions and employer organisations were keen to prevent retail superannuation funds from forcing high fees on members, so a number of industry super funds were set up to service many of the major industry sectors and provide a viable low-fee super option for those workers.
While initially only workers in those industries could join the fund, most industry funds have become what’s called “public offer funds” since then, meaning they’re now open to anyone to join. The table below is a snapshot of some of the industry super funds available to Australians and the industries they were originally set up to support.
| Industry super fund | Target industry |
|---|---|
|
CBus |
Construction and building |
|
Energy Super |
Energy, renewables and electrical |
|
First Super |
Furniture, joinery, paper and timber |
|
HESTA |
Healthcare and community services |
|
Hostplus |
Hospitality and retail |
|
Legalsuper |
Legal professionals |
|
Maritime Super |
Maritime |
|
Media Super |
Print, media, entertainment and arts |
|
MTAA Super |
Motoring and small business |
|
REI Super |
Real estate |
|
TWUSUPER |
Transport |
|
UniSuper |
University employees |
For the most part, Industry super funds work the same way as any superannuation fund. Every payday, your employer diverts part of your income into your super fund – generally 9.5% (although you can choose to contribute more). The super fund then takes that money and invests it in a variety of ways, which might be a mix of shares, property, and more stable investments like business loans. The money will slowly grow over time, until eventually you reach retirement age when you can access the money – either as a single lump sum or as a long series of regular payments (effectively acting as a wage for your retirement).
Most funds also have additional products offered as part of the package, including affordable insurance for loss of income, permanent disability and loss of life. Some also offer other services, such as financial advice. The fees for these services are generally paid out of your super.
The main way that industry super funds differ from retail funds is how they handle profits. Industry super funds are what’s known as profit to member organisations. Retail super funds are generally owned by shareholders, meaning that part of the profits made by the fund go back to them. By contrast, industry super funds generally cycle those profits back to members of the fund, which show up as lower fees and better returns on your super. This difference means industry super funds can be a competitive super option and can often offer very good returns.
Sometimes, retail super funds can have more options on offer for their members. They might have more control over investments or more insurance choices or financial advice options as a way to attract customers. However, aside from this, publicly available industry super funds run quite similarly to retail funds.
You should compare an industry super fund to its competitors in the same way as you would with any superannuation product, asking the same sort of questions:
No – public sector funds and some corporate funds operate on a similar model to industry super funds, but they’re often only available to a very specific group of employees. These are government workers in the first case and employees of a specific company in the second. If you have access to one of those funds, it’s definitely worth considering as you compare your super options. They’re off limits to most workers, though.
The advantage of industry super funds is that they’re profit-to-member funds that are available to everyone. Technically, a self-managed super fund is also a profit-to-member fund, but that’s generally because you’re doing most of the work of investing and managing the profits yourself. That’s a lot more complicated and generally not a worthwhile option for the average Australian worker.
This is the default option for many industry super funds. It’s generally a balanced investment strategy of some kind with a mix of risky and safe investments and they tend to have low fees. The trade-off is that, if you select a MySuper account, you may noy be able to change your investment strategy later on – this is the “autopilot” option where you’re letting the fund managers take care of all the investment decisions.
This kind of investment strategy is high risk, high return. Your super balance will normally increase a lot faster with a strategy like this, but it will fluctuate a lot. These kinds of strategies invest a lot in things like property and the share market, which can provide good returns but are also a lot less predictable. But they still keep a portion of your money in more stable types of investment, just to be safe. Growth investments can be a decent choice early in your career, where you don’t have much super to lose, and there’s plenty of time to recover.
This kind of strategy is more cautious. Your super balance will go up slowly, but it will be steady and not fluctuate much. These types of investments tend to focus on things like cash investments (like putting your money in a term deposit with the bank), although they might still have a small portion of your money in riskier investments. A conservative strategy can be good as you get older and have more super in your fund to lose if there’s a bad year.
Balanced strategies involve a mix of different investment types, to give you a good balance of risk versus return. If you don’t have much interest in changing your super investment strategy, a balanced strategy is probably a good all-rounder option to go with – or a MySuper option, which normally uses a balanced strategy.
Profit-to-member structure – The setup of an industry super fund means that there’s less overheads thanks to a lack of shareholder ownership, improving meaning more profits being returned to members.
Good performance, lower fees – As a result of being more cost efficient, industry super funds rank among the highest return funds, and often have very low fees.
Often invested in Australian infrastructure – Industry super funds often invest in unlisted assets, which includes Australian infrastructure such as bridges, roads, shopping centres, airports and public transport – often directly applicable to their focus industry.
Good alignment with a specific industry – Although most are now open to any new members, many industry super funds continue to invest in and support their focus industry so people working in that industry are helping themselves by using the fund.
Not owned by a bank or financial institution – Many workers appreciate the fact that their super isn’t controlled by a large corporation, but rather run by – and for – members.
Less investment options – As a rule, industry super funds have less options and flexibility than retail funds when it comes to how your money is invested. For example, only one Australian industry super fund offers a lifecycle investment strategy (that’s an investment strategy that progressively changes its level of risk over your lifetime).
Less perks – Retail super funds come with various services attached as added perks – such as financial advice, or the ability to view your superannuation balance when accessing your normal bank accounts. Most industry funds can’t offer the same level of added extras.
Unlisted assets – The fact that industry super funds invest a lot of unlisted assets means much of their members’ funds are tied up in assets that are potentially hard to value and tricky to sell.
Often industry specific – Although the specific focus of some industry super funds can be great for workers in that industry, members who aren’t part of that industry might not benefit as much from the way the funds invests funds and runs.
Some profits spent on advertising – Although industry super funds don’t have to pay shareholders and don’t pay commissions to financial planners, some of the profits do go into advertising to attract new members. This can take a cut out of member returns.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
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© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
© Copyright 2024 Quantum Savvy Pty Ltd T/as Savvy. All Rights Reserved.
Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.
We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.
For more information about us and how we conduct our business, you can read our privacy policy and terms of use.
