How you can avoid super ripoffs*

Being in the right super fund could make a big difference to the money you have for retirement. It could dramatically impact when you are able to retire and the lifestyle you have when older. Unions are campaigning to ensure members are properly protected by a stong Superannuation clause in Enterprise Agreements. Remember, under the Fair Work laws, it’s not enough to rely on the Award — you need to make sure super is included in an Enterprise Agreement to stop the rip-offs.

Rip-off no.1: No default fund or super clause in EA

Over 40% of Enterprise Agreements do not have a superannuation clause that names a default fund. This means employers are able to choose poorly performing and high-fee super funds to be the default for potentially millions of workers. Superannuation is not fully dealt with by the Modern Award. There needs to be a strong super clause in union Enterprise Agreements. Without a comprehensive EA clause, important matters like how super is calculated, when it is paid, and arrangements for salary sacrifice contributions will be left up in the air.

Rip-off no.2: High fees

The fees you pay on your super can greatly affect your final retirement payout. Just 1% extra in fees charged over 30 years could result in tens of thousands of dollars less in retirement benefits or up to 20% less(1).Industry super funds have low fees, which means your members could be better off. 

(1) Figures, assumptions and examples from

Rip-off no.3: Low performance

For the last eight years, 49 of the top 50 performing funds were all-profit-to-member funds (which includes industry, corporate and public sector funds). By contrast, most of the retail funds measured were in the bottom half of funds by performance.(2)

(2) Figures to June 30 2011. APRA Superannuation Fund-level Rates of Return (29/02/2012).    Past performance is not a reliable indicator of future performance.

Rip-off no.4: Commissions

Retail super funds pay commissions to financial advisers, financial planners, insurance companies and sales agents. They rely on a network of hundreds of branches of the big banks and financial planners for their distribution

Industry super funds do not pay commissions. This helps keep their fees down and their returns higher for members.

Rip-off no.5: Profits go to shareholders

The profits of the retail super funds go to their shareholders, not the members of the fund. And did you know that most of Australia’s biggest retail super funds are also owned by the big banks? While it is not known how much the retail funds contribute to the profits of the big banks, you can bet the banks are always looking for more.

On the flipside, industry super funds are run only to benefit members. Whatever profit industry super funds make goes back to the members of the fund.

Rip-off no.6: No democracy

Retail funds are run by boards of directors that are appointed by the shareholders. In many cases they are run by people appointed by their owners, the big banks. This means retail fund members have almost no say in the running of their fund. Retail funds have fewer women on their boards and they spend much more on executive pay.

Industry super funds however, have equal numbers of employee (union) and employer representatives on their trustee boards. Industry funds also enjoy almost three times the proportion of women directors on their boards compared to the average company. Having a diverse board and being in touch with the needs of members in the workplace helps industry super funds achieve better returns and lower fees.

*Consider your own objectives, financial situation and needs before making a decision about   superannuation because they are not taken into account in this information.

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