Industry and retail superannuation funds – what’s the difference?
Roy Morgan recently released the results of its long-running survey gauging customer satisfaction with superannuation funds, and the results were striking: Although satisfaction in general has increased over the last year, industry funds just edged out retail funds by 2.7 per cent.
This got us thinking: For the average person with superannuation in Bowen, Cannonvale, Proserpine and other Whitsunday Shire areas, these terms probably don't mean a lot. Here's a brief explanation about the differences, the pros and the cons of each.
What are retail funds?
Retail funds were originally developed by financial institutions and insurance companies. They are typically run by investment companies and banks and, alongside providing retirement benefits to members, also generate profit for the company that owns it. Anyone can became a member, and they generally offer many investment options – hundreds in some cases.
What are industry funds?
The chief difference with industry funds is that they aren't for profit in the same way retail funds are. Rather, any profit is re-invested in the fund for the benefit of all the members.
In addition to this, they usually have less options than retail funds, and are also lower in cost than them. While an increasing number of industry funds are open to anyone, with some, you must be employed in a specific industry to join.
Which should I choose?
Which one you decide to go with depends on your particular needs. If you like a greater amount of choice when it comes to investment, and don't mind paying higher fees, a retail fund could be the way to go. Retail funds also provide you with more advice, which could be helpful for your investment success.
While industry funds don't do this, they also charge less. If you're worried about the bottom line, it might be worth going down the industry path.