Super Choice - thankfully will not apply to most RTBU members

By Kristin Van Barneveld

On May 4, 2005, Superannuation Trust of Australia and the Australian Retirement Fund decided in principle to create a new fund with one million members, and over $13 billion in funds.

There are limits on this 'super choice':

• Workers covered by a certified agreement or an Australian Workplace Agreement will continue to have their superannuation contributions paid to the fund(s) nominated in their agreement.
• Workers covered by a State Award - such as Skitube members - will continue to have their superannuation contributions paid to the fund(s) nominated in their Award.
• Workers covered by a federally registered award must be offered choice by their employer regardless of whether their federal award requires contributions to be made to a specific superannuation fund.

Industry Funds such as STA, Q-Super, and First State Super continually outperform 'retail funds'. The key differences between retail and industry funds, summarised in the box, indicate why.

All profits by Industry Funds go back to the members' accounts. Some profit from retail funds goes to shareholders.

So ignore the slick marketing campaign to attract workers from Industry Funds to retail funds (see for example the Virgin TV advertisements and all the junk mail starting to appear in home letterboxes). Keep in mind that any features of these funds that might appear to provide an initial benefit to the worker, will probably not do so in the long run.

A good website for further information on the performance of individual funds is the independently run 'Super Ratings' site: http://www.superratings.com.au

Key differences between Industry Super Funds and Retail Funds:

• Industry funds provide all profit to members.
• Retail funds pay commissions to financial planners to reward them for recommending the Fund to people.
• Industry Funds have lower fees and charges, no hidden costs. Retail funds have higher fees and charges, especially exit fees.
• Historically Industry Funds outperform the retail funds.
• Retail funds consist of the banks, insurance companies, and financial service companies that all strive to make millions in profit every year.