Super: How today’s choices affect tomorrow’s outcomes
Superannuation is likely to be one of the biggest investments an Australian worker makes during their life.
Which fund to trust their retirement savings to is an important decision.
It’s surprising then that so many leave that decision to their employers.
A workplace’s choice of superannuation provider today can have a massive impact on the retirement outcomes for their staff well into the future.
With the power of compound interest in play, super is very much a long-term investment.
And so investment returns are one obvious marker of quality to look for in a default fund.
According to leading independent superannuation analyst, SuperRatings, as of 31 May 2019, Hostplus’ default Balanced option was the number one investment choice over 3-, 5-, 7- and 20-year periods.
But investment performance isn’t the only measure of a fund’s value to members.
To understand just how much better off your team might be with one fund over another, it’s important to look at the ‘Net Benefit’.
Simply put Net Benefit represents the money a member receives, after all fees, taxes and investment earnings have been taken into account, versus the money put into their account over time.
Each year SuperRatings release comprehensive data to compare the Net Benefit of major super funds against the retail and industry fund averages.
This important comparison shows just how much variation there can be between funds.
For the 15-year period ending 30 June 2018, Hostplus members in the default Balanced option were $31,000 better off than the average industry fund member and an impressive $77,000 ahead of the average retail fund member.
Another way of assessing Net Benefit is to look at dollars spent vs dollars earned. For example, over the same time period, for every $1 paid by Hostplus members in fees, they received $10.10 back into their accounts. The average return for $1 paid in fees by the average retail fund member is less than half that amount at just $3.90.
These figures are after contributions, investment earnings, and all fees and taxes were taken into consideration*.
Results like this clearly demonstrate the significance of fund choice.
Given most Australians will be a part of the work force for considerably longer than 15 years, the potential exists for an even larger difference over 30 or even 40 years.
With 1.2 million members, over 185,000 employers and more than $44 billion funds under management, the scale and ongoing growth of the fund affords their members high value, competitively priced retirement products to help them get the most out of their working years and all that comes after.
For more information visit hostplus.com.au or call 1300 467 875.
*Assumptions: Annual inflation 2.5%, wage increase 3.5%p.a., superannuation guarantee rate 9.5%, contribution tax 15%, annual salary $50k, starting balance $50k. Insurance arrangements may have additional impact on outcomes. Past performance is not a reliable indicator of future performance and should never be the sole factor considered when selecting a superannuation fund.
Before deciding if Hostplus is right for you, please read the Product Disclosure Statement available at hostplus.com.au. Host-Plus Pty Limited ABN 79 008 634 704, AFSL 244392, RSE L0000093 in its capacity as the Trustee of the Hostplus Superannuation Fund ABN 68 657 495 890, RSE R1000054, MySuper No. 68657495890198 (the Fund).