Industry super fund
Many industry super funds were started by trade unions and industry bodies to help their members fund their retirement. Although most industry super funds were originally exclusive to members working in a particular industry, legislation has now opened most up to anyone. In contrast to retail super funds run by financial companies such as banks, industry funds are also called profit-for-members funds as any profits they make are returned to members in the form of improved products and services rather than being paid to shareholders in the form of dividends.
A superannuation fund is similar to a managed fund. The money of members of a superannuation fund is pooled together and invested by the fund with the goal of helping each member’s balance grow for the future. Most employers are required by law to contribute at least 9.5% of each of their employee’s eligible earnings into the employee’s superannuation fund. You will generally be able to choose your superannuation fund and tell your employer to pay your contributions into this fund. If you don’t choose a fund, your employer will pay your contributions into the superannuation fund they choose. You can also make additional contributions to your superannuation fund to help your balance grow. These can be from your before-tax earnings or after-tax savings. You will generally pay less tax on your money in a superannuation fund than money you earn outside of super. You generally can’t access your money in superannuation until you retire. Once you retire, you can take your money out of your superannuation as a regular income stream or one or more lump sum payments.
Retail super funds are owned and managed by banks and other financial institutions. These companies are publicly listed companies and have shareholders. So, while retail funds exist to help members save for their retirement, they also aim to earn a profit to return to their shareholders.
The superannuation fund an employer chooses to pay their employees’ superannuation contributions to if an employee doesn’t make their own choice of fund. When starting a new job, your employer will give you a standard choice form. You can use this form to tell your employer to pay your superannuation contributions into the fund you choose. Or you can accept that your contributions will be made into the employer’s default fund – which they will complete on the form. If your super is with a fund like Sunsuper, you can also generate a pre-filled form and send this to your employer to tell them you want your super contributions to continue to be paid into your Sunsuper account.
Profit-for-members super fund
Profit-for-members funds like Sunsuper don’t have shareholders to pay so they exist solely to benefit their members and any profits they make are returned to members in the form of lower fees or improved products and services.