Super Funds: Where Does Your Money Go?

Industry super funds are Australian superannuation funds that were historically established by trade unions to manage retirement savings for workers in their industry. They are not-for-profit funds, which means profits are returned to their members. Industry funds differ from retail super funds in that they are not owned and run by a for-profit organisation, such as a bank or another kind of financial institution. While no super fund is allowed to run at a profit, the organisations that run retail funds can outsource to service providers that they own, which do look to make profits. Industry super funds are run to benefit members and are also called profit-for-member funds.

Characteristics of Industry Super Funds

Industry super funds are not-for-profit

Industry super funds were originally established by trade unions and industry bodies to provide for their members' retirement. They were historically specific to certain industries, such as health or education, but following reforms, most are now open to the public. These are known as 'public offer funds'.

Industry super funds are run to benefit their members, and they generally charge lower fees than retail funds. A report by the Productivity Commission found that not-for-profit funds outperformed retail funds on average within most major asset classes over a ten-year period ending in 2017. This is partly because industry funds do not outsource to service providers that seek to make profits, which can drive up costs.

Industry super funds are also able to offer specialised insurance coverage. For example, the construction and building union fund Cbus offers automatic cover for people working in dangerous occupations, which may not be available in other funds.

While industry super funds are not-for-profit, it's important to note that no superannuation fund is allowed to run at a profit. All funds must operate with their members' best financial interests in mind.

Industry funds are run by members

Industry super funds are run to benefit members and are also called profit-for-member funds. This means that all profits from fund operations are retained by the fund membership. They are not owned and run by a for-profit organisation, such as a bank or financial institution. Instead, industry funds were initially started by unions and employer associations, but they do not own them, and members own the funds in them.

Industry super funds were originally developed to provide for members in retirement from a specific industry, such as health or education. However, following reforms, most industry funds are now open to the public, so anyone can join. These are known as 'public offer funds'.

Industry funds are generally able to charge lower fees than retail funds. The Productivity Commission found that while total fees for administration and investment management had been trending down over the past decade, fees for industry super funds remain lower than retail super funds.

Industry funds also generally deliver better investment performance for members than retail funds. The Productivity Commission's report found that not-for-profit funds outperformed retail funds on average within most major asset classes over the ten years to 2017.

Industry funds may also offer members specialised insurance coverage. For example, a construction and building union fund offers members automatic cover for people working in dangerous occupations, which may not be available in other funds.

Industry super funds are governed by trustee boards, with board appointments from employers, trade union representatives, and employees from the relevant industry.

Industry funds are open to the public

Industry super funds were originally established by trade unions and industry bodies to provide for their members' retirement. They were typically restricted to people working in a specific industry, such as health or education. However, following reforms, most industry funds are now open to the public. These are known as 'public offer funds' and are regulated by APRA.

While some smaller industry funds may still only be open to specific industries, the majority of industry funds now accept members from all industries. For example, the hospitality industry was long represented by Hostplus, while UniSuper was once the preserve of higher education workers. Today, these funds are open to a majority of Australian workers.

As of 2023, all industry funds operate under the legal structure of being a non-profit mutual fund. This means that all profits from fund operations are retained by the fund membership. Industry funds are also typically low to medium cost, and most offer MySuper products.

When choosing a super fund, it is important to consider factors such as investment performance, fees, investment options, and insurance. Industry funds generally deliver better investment performance and charge lower fees than retail funds. They may, however, offer a smaller range of investment options.

Industry funds have lower fees

Industry super funds are run to benefit members and are also called profit-for-member funds. This means that all profits from fund operations are retained by the fund membership. As a result, industry funds are generally able to charge lower fees than retail funds.

In its report from early 2019, the Productivity Commission found that while total fees for administration and investment management had been trending down over the past decade for APRA-regulated superannuation funds (from 1.3% in 2008 to 1.1% in 2017), fees for industry super funds remained lower than for retail super funds.

For example, AustralianSuper, Australia's largest super fund with 3.4 million members, charges fees of $1 per week plus 0.10% pa of the account balance (up to $350 pa). In contrast, retail funds often range from medium to high cost.

Most large industry and retail super funds do offer MySuper accounts, which are simple accounts that typically charge lower fees. However, it is important to compare the fees charged by different funds and make sure you are not paying more than you should.

When choosing a super fund, it is also important to consider factors such as investment performance, investment options, and insurance.

Industry funds have better investment performance

Industry super funds are run to benefit members and are also called profit-for-member funds. They are not owned and run by a for-profit organisation, such as a bank or another financial institution. The fees for industry super funds are lower than retail super funds as they are run for members, not shareholders.

Industry funds generally deliver better investment performance for members than retail funds. The Productivity Commission's report found that not-for-profit funds outperformed retail funds on average within most major asset classes over the ten years to 2017. Super Ratings' list of the top 10 performing superannuation funds over any time period features mostly industry funds.

Industry funds may also offer members specialised insurance coverage. For example, the construction and building union fund Cbus offers members automatic cover for people working in dangerous occupations, which may not be available in other funds.

Frequently asked questions