Get to know the different types of super funds and how they work.

Super funds come in different shapes and sizes. The type of super fund you’re invested in can affect the fees you’ll pay, the investment choices you have, and how your savings grow.

Knowing what’s on offer makes it easier to see if yours is the right fit – or if it’s time to make a change.

 

When it comes to superannuation, there are three key concepts that are important to understand.

1. The superannuation fund – is the legal entity that’s holding your retirement savings for you. Each fund is managed by a trustee who looks after your money in the fund.

2. Your superannuation account – is the account, in your name, for your money in the super fund (like your bank account, but for your retirement savings).

3. Your investment options – are the types of things (such as cash, shares, property) that your retirement money is invested in.

So, below we’ve explained the main types of super funds, super accounts and super investment options you can choose.

1. Types of super funds

There are five main types of super funds in Australia. They all aim to help you build savings for retirement, but they work in slightly different ways. 

Industry funds 

Once limited to workers in certain industries, most industry funds are now open to everyone. 

• Fees usually sit in the low to medium range. 

• Profits go back to members. 

• Most members hold accumulation accounts. Some longer-term members still have defined benefit accounts. 

• Most have a MySuper default option. 

Retail funds 

Usually run by financial institutions and are open to anyone. 

• Fees range from low to high. 

• Not all profits go back to members – some go to the company running the fund and their shareholders. 

• Usually a wide range of investment options. 

• Most have a MySuper default option. 

Public sector funds 

Open to certain people working for the government. 

• These funds often charge lower fees than other fund types, as some fees are paid by your employer. 

• Profits go back to members. 

• Newer members hold accumulation accounts, while long-term members may still hold defined benefit accounts. 

• Usually fewer investment options available. 

• Many have a MySuper default option for members holding accumulation accounts. 

Corporate funds 

Set up by companies for their employees only, although some corporate funds are open to everyone.  

• Large-company funds may charge lower fees, while smaller-company funds may charge higher ones. 

• Profits usually go back to members, but corporate funds run as a retail fund might keep some profits. 

• Most members hold accumulation accounts, but some older members still have defined benefit accounts. 

• Smaller funds might have fewer investment options available. 

Self-managed super funds (SMSF)

 
A super fund you set up and manage yourself. 

• Up to six members, all legally responsible as trustees. 

• You have full control over how the money is invested. 

• They usually have higher costs, more admin, and greater risk. 

• Best suited to people with larger balances and the time and knowledge to manage them. 

• Strict ATO rules apply – and penalties apply if you get it wrong. 

Running your own super fund is a big commitment. Read more about self-managed super funds (SMSF) if you think running one might be right for you.  

2. Types of super accounts 

Think of your super account as like your bank account, but for your retirement savings instead of your other savings. You and your employer pay money into your super account while you’re working, so you can later take money from your account in retirement (or when you're about to retire). 

While you’re still saving 

Most people will have one of these accounts: 

Accumulation account 

• The most common type of account. 

• Your balance accumulates through contributions from you and your employer, and earnings from your investments (minus fees). 

• Your final balance depends on how much money goes in and how your investments perform over time. 

Defined benefit account 

• Less common, as defined benefit accounts are only open to certain workers or no longer accept new members. 

• A formula sets your retirement payout. It usually considers: 

• the money you and your employer put in 

• your average salary over the last few years before retirement 

• how long you worked for your employer. 

• Some defined benefit accounts provide very generous benefits, so get advice before leaving one. If you leave, you can’t rejoin. 

 

While you’re winding down 

Transition to retirement (TTR) account 

• A Transition to Retirement account lets you access some of your super while you’re still working (from age 60). 

• Can help top up your income or help you reduce work hours as you ease into retirement. 

There’s a lot to think about before you start spending your super. Find out more about getting your super, so you’re ready when the time comes.

 

When you start spending 

As you reach retirement, or get close to it, you can move your super money into one of these accounts: 

Account-based pension 

• An account-based pension turns your super balance into regular income. 

• It also lets you take lump sums out when needed. 

• The payments stop once your balance runs out. 

Annuity 

• An annuity pays an income for a set time, or for life. 

• Some annuities guarantee payment amounts regardless of investment market conditions, while other annuities link payment amounts to investment performance. 

• Offers more certainty, but less flexibility in how you are paid – once you start, you usually can’t change the terms of the annuity. 

Types of investment options 

Your super could be one of the biggest investments you’ll ever have. That’s why it’s worth knowing how your money can be invested. The investment option you pick can affect how your balance grows over time. 

MySuper  

If you don’t choose an investment option, your fund puts your money into a MySuper default option. 

• Simple, low-fee products. 

• Often puts your money into a diversified investment portfolio, using a ‘balanced’ strategy that has a moderate risk level, or a ‘lifecycle’ strategy that shifts your money from higher-risk to lower-risk investments as you approach retirement.  

• These products aim to suit most people without requiring them to make active decisions. 

Choice options 

If you want more control over how your money is invested, you can choose other investment options. 

• Can include pre-mixed investment options such as growth, balanced, or conservative. 

• Some funds let you choose your own mix of asset types like Australian or international shares, property, or cash. Sometimes you can even invest directly in specific assets. 

• These options give you more say in how you invest your money, but this means you have more responsibility to make decisions to suit your needs. 

Learn more about super investment options and how to make the right choice for you.