Key points
- Employers must pay 12% of your ordinary earnings into super (the Super Guarantee rate rose to 12% on 1 July 2025).
- Fees compound. A difference of 0.5% a year is worth tens of thousands of dollars over a working life.
- APRA runs an annual performance test, and the ATO’s YourSuper tool ranks MySuper products on fees and net returns.
- Switching funds can cancel the insurance held inside the old fund, so check cover before you move.
Super is one of the largest assets most Australians will ever hold. By retirement it’s often second only to the family home, and for many people it’s larger. Yet most never actively choose the fund their super sits in. It’s the one their first employer picked, and it’s carried them ever since. Choosing the fund deliberately is one of the highest-value financial decisions you can make, precisely because the money compounds for decades.
Here’s what actually moves the outcome, in the order it matters.
Fees
Fees are the one variable you can control with certainty. Returns vary year to year and no one can promise them. Fees are charged whatever the market does, and they compound against you for as long as you’re invested.
The gap between a low-cost and a high-cost fund is often around 0.5% to 1% a year. On a balance that grows over a full working life, that difference runs to tens of thousands of dollars, sometimes more than $100,000 by retirement. Look at the total cost, which includes the administration fee, the investment fee, and any percentage-based advice fee bundled in. A flat-dollar admin fee hurts small balances more; a percentage fee hurts large ones. Match the fee structure to your balance.
Long-term performance
Performance matters, but not the way the marketing implies. A single strong year tells you almost nothing. What matters is net return, after fees and taxes, over seven to ten years or longer, compared against funds with the same investment mix.
Two tools make this easy and neither costs anything:
- The YourSuper comparison tool on the ATO website ranks MySuper products on fees and net returns, so you can see where a fund sits against its peers.
- APRA’s annual performance test assesses whether a fund has delivered acceptable returns for its fees. A fund that fails must write to its members, and repeated failures effectively push it to close or merge.
Compare like with like. A high-growth option should be measured against other high-growth options, not against a conservative one. Judging a balanced fund against a growth fund in a strong sharemarket year is how people talk themselves into switching at the wrong time.
Insurance inside super
Most funds include default life and total-and-permanent-disability cover, and often income protection. For a lot of people this is the only insurance they hold, and it’s paid from the super balance rather than from take-home pay.
Two things to check. First, whether the default cover actually suits you. It’s set for an average member, so it can be too little for someone with a mortgage and dependants, or an unnecessary drag on the balance for someone young with no liabilities. Second, and this is the trap, switching funds usually cancels the cover in the old fund. If you’ve developed a health condition since you first got the cover, you may not be able to replace it. Never close the old account until the new cover is confirmed and in force.
The fund type
Beyond individual funds, there’s the question of what kind of fund suits you.
- MySuper (default) options are low-cost, diversified, and designed to be a sensible home for someone who doesn’t want to make active choices. For many people they’re a perfectly good answer.
- Choice options within industry and retail funds let you pick your own investment mix, from conservative to high growth, and tailor the risk to your timeframe.
- A self-managed super fund gives you direct control over the investments, including the ability to hold direct property or specific shares. It brings real responsibilities, running costs, and compliance obligations, so it suits people with the balance and the interest to justify it. Our SMSF service walks through whether that control is worth it for your situation.
There’s no single best fund. The right answer depends on your balance, your timeframe, your appetite for involvement, and your insurance needs.
How to compare, and switch safely
If you’re reviewing your super, work through it in this order:
- Find all of it. Many people have several accounts from past jobs, each charging fees and possibly duplicate insurance. The ATO makes it simple to track down lost super and consolidate.
- Check your cover before consolidating. Confirm the receiving fund’s insurance is adequate and active before you close anything.
- Compare on net return and total fees, over the long term, like against like.
- Check you’re on track. Whether your balance is where it should be for your age is a separate question from which fund it’s in. Our guide on how much super you should have by age gives the benchmarks.
Consolidating and switching sounds simple, and often it is. The risk sits in the insurance, in switching to chase a hot recent return, and in moving a large balance without checking the fee structure suits it. Those are the mistakes worth avoiding, and they’re the ones a review is designed to catch.
Choosing the right super fund, structuring the insurance, and deciding whether an SMSF is worth the effort are decisions that pay off over decades. If you’d like a second opinion on your fund and where your super’s headed, speak to an AGS financial planner.