Finance Dollars & Sense New ATO tool to help members choose a better super fund

New ATO tool to help members choose a better super fund

Members will be able to compare the performance of different superannuation funds using a new tool from the ATO.
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Australians will be able to compare the performance of different superannuation funds through a new Australian Taxation Office comparison tool from July 1.

The introduction of the ‘YourSuper’ comparison tool was included in the Morrison government’s Your Future, Your Super bill and will display a table of MySuper products ranked by fees and investment returns.

Superannuation Minister Jane Hume said the interactive tool – which members will be able to access via their MyGov account – would “make the performance of default MySuper products clear and comparable”.

“These are funds that many thousands of Australians find themselves automatically signed up to, and now these funds will have to compete for the hard-earned retirement savings of Australians,” Senator Hume said.

Thanks to reforms from the Morrison government, you can log in to the ATO through MyGov and with a few clicks check for lost super, consolidate accounts and even compare accounts to find a better deal.”

The comparison tool is a big win for consumers, but members should also do some of their own research to get a better deal on their super.

Here’s what you need to know.

Compare superannuation returns

The benefit of high returns should be self-explanatory.

But what some people may not realise is how a seemingly small difference in annual returns, in percentage terms, can translate into a gap worth hundreds of thousands of dollars at retirement.

Super Consumers Australia director Xavier O’Halloran said members should therefore pay close attention to their super fund’s returns and compare its performance using the ATO’s comparison tool.

The interactive table will only include the performance of default MySuper funds such as Hostplus and Cbus for the first 12 months, though.

And so members who want to compare the performance of MySuper funds to that of Choice funds will have to visit individual fund websites and compare their numbers with those listed in the ATO’s YourSuper tool.

Mr O’Halloran also advised members to compare apples with apples when conducting their research.

This means using the same investment timeframes when assessing each fund’s performance and only comparing the returns of funds that have similar risk and investment options (i.e. ‘balanced’ or ‘growth’ options).

Consider fees

Choosing a fund with low fees is also crucially important for members.

In 2018, the Productivity Commission found that an increase in fees of just 0.5 percentage points could cost a typical full-time worker about 12 per cent of their balance, or $100,000, by the time they reach retirement.

Mr O’Halloran said average fees in the MySuper sector were currently tracking close to 1 per cent – a figure that should give members a clear picture of whether they are getting a good deal on their super.

Members can compare fees using the ATO’s tool and by visiting the websites of individual super funds.

Source: Productivity Commission

Mull over investment options

Most superannuation funds offer a range of products to cater for the needs of people with different needs and risk appetites.

ASIC’s Moneysmart website provides a summary of the key options on offer here, and members can find out what type of option their money is invested in by contacting their super fund.

“It’s important to understand the risk-return trade-off in all investment options,” Mr O’Halloran said.

“More conservative options may have lower returns, but they will be more consistent over time, whereas higher-risk options may have a higher return over the long term but a lot more volatility.”

He said working out which option is the most appropriate for you will depend on when you plan to retire and how much longer your money will be invested in the market.

Think about insurance

Super funds typically offer three types of insurance: Life, total and permanent disability, and income protection.

But many members will be unaware they are signed up to this cover.

Mr O’Halloran said the first step is to find out what cover you have by contacting your fund or logging into your member account via the super fund’s website.

He said you should then work out the benefits and costs of your policy and whether it covers your specific work situation, as many products exclude certain occupations or people who work part-time or have had a recent bout of unemployment.

Take into account ‘ESG’

Finally, an increasing number of Australians do not want their money invested in fossil fuels or other industries they deem unethical.

If this is you, then a good place to start is by perusing your super fund’s website.

Look for their ESG (Environmental, Social and Governance) policy and find out whether they offer an ‘ethical’ fund that excludes the industries you would like to avoid.

If they don’t offer a product that suits your needs, the Responsible Investment Association Australasia has a searchable list of ethical banking, superannuation and investment products.

The New Daily is owned by Industry Super Holdings