What features to look for in a default super fund

Why do you need a default super fund?

As an employer in Australia, setting up a default super fund which offers a MySuper product is a legislative requirement. It ensures you can meet your Super Guarantee (SG) obligations and means your eligible employees receive their super contributions consistently and in compliance with legal obligations.

You need to ensure you open an account in your default super fund for your employees in the following situations:

• When a new employee doesn’t nominate a specific super fund, and does not have a fund ‘stapled’ to them.
• If your industry award or enterprise agreement specifies a default fund, you must make super contributions for employees covered by these agreements into the designated default fund.

When choosing a default super fund, it is useful to consider what benefits are available for your employees through the super fund, for example performance and returns, investment options, fees, insurance arrangements, and access to education and advice services.
 

Default super fund – features to consider

Performance and returns

Consistently high-performing funds can maximise long-term returns for your employees. Make sure to evaluate the fund's historical performance over various time periods (i.e. 1-year, 3-years, 5-years and 7-years), compare the performance against relevant market benchmarks to ensure stability and growth potential, and assess the asset allocation (mixture of growth and defensive assets) given the demongraphic composition of your employee base (e.g. are they older which may mean their risk tolerance is lower, or younger which may mean they have a high risk tolerance).
 

Costs and fees

While low fees are attractive, ensure there’s a balance between competitive fees, allocation to growth assets (for the investment related fees) and access to quality services such as education and advice. Scrutinise management fees and any additional charges to improve your employees' retirement savings.
 

Investment strategy alignment

Consider the funds investment strategies and whether they align with the organisational and employees’ risk tolerances and financial goals. Offering a diverse range of investment options can help meet the varying needs of your employees, including tolerance to risk.
 

MySuper and other investment options

Have a look at what sort of investment options are available. For example, in addition to the MySuper default investment option, will your employees be able to choose from a menu of investment options and change their allocation to different asset classes? This can be an important factor for those employees who may want to become more involved with their superannuation investments.
 

Insurance

Ensure the fund offers insurance cover options, such as death (including terminal illness), total and permanent disablement, and (where available) income protection^, which can be crucial for protecting your employees and their beneficiaries. Also look for a fund that provides options to allow you to tailor insurance arrangements to suit your employee’s needs, including the ability for the employer to subsidise any element of the insurance arrangment if desired.
 

Expertise and reputation

Research the fund's track record, management team expertise, and overall reputation within the industry to ensure stability and reliability for your employees' retirement savings.
 

Additional benefits

Assess the additional benefits provided by the fund, such as subsidised insurance costs, educational seminars and webinars, and access to wellness programs. These benefits could add significant value not just to your employees' retirement savings but to their overall financial and personal wellbeing.
 

Customer service quality

The level of customer service, accessibility, and resources provided by the fund is important. Consider a fund that offers excellent support to you as the employer and to your employees so you can both be assisted with questions and eventual retirement outcomes.
 

Product offering

Consider if your super fund has a diverse range of products, including retirement solutions, so your employees may be able to better transition and tailor their super strategy to ultimately enhance their financial security and retirement readiness.
 

Educational resources

Take a look at what education the super fund has on offer. The more informed your employees are, the more likely they can make informed decisions about their super. Resources could include webinars, guides, and interactive tools that enhance financial literacy.
 

Advice offering

As super is a long-term investment, the needs of your employees may change over time. Consider a fund that provides an array of accessible financial advice services to help employees navigate their evolving financial circumstances.
 

Ease of interaction

The convenience and accessibility of the fund's communication channels, online tools, and mobile apps are important for a user-friendly experience. It’s also worth ensuring the fund provides easy-to-use platforms for you to manage your super obligations.