Choosing superannuation life insurance policy such as a super fund is not mandatory although this would greatly benefit you when you retire. Super fund is a retirement benefit that an employer or a self-employed individual can assume. Generally, the employer pays 9% of basic wages as superannuation contribution as required by the law.  The company or employer is usually connected to an insurance agency that will keep the investment and where contributions are paid. Self employed individuals likewise can avail of their own choice of super fund since anyone who is in the workforce can choose any superannuation fund to undertake. You need to be wise when choosing the fund that would best fit your needs and budget. Because of the many options available for you, you will find the following information useful when making your selections.

Tips in Choosing a Super Fund

• Get enough information about a super fund. It is fundamental to know all the options available for you. Getting sufficient information about the superannuation fund can help you make knowledgeable choices on which super fund is best for your specific needs. You can find wide information available in the internet with many websites offering expert and professional advice regarding superannuation. Look for online sites that offer impartial reviews to help you compare superannuation features and benefits.

• Look at the investment performance. One way to choose the appropriate super fund is to consider the investment performance. However, you need to take this approach cautiously as although it may seem to appear as a reliable indicator of future performance, it can be a trap to give you unreliable indicator with reference to a fund’s investment performance. It comes highly recommended to consider the comprehensive or diversified balance portfolio before selecting the fund which suits your needs. It is also wise to compare superannuation fund performance for over many years rather than just one or two. One way to get good performing fund is to look at the funds that the experts use. These super funds are most favoured even by several other superannuation consultancies.

• Get more value from your investment. Another consideration you should look into when searching for a super fund is the fees involved. You should know the charges and fees when selecting a fund. Higher fees can mean more services and features of superannuation fund available to you. Take a careful look on the features and benefits corresponding to each fee and determine whether you really need all of them otherwise you may forego some so you will be charged at a lower rate.

• Choose competitive insurance. When looking for a superannuation fund, you need to find one which is competitively priced. Settle for a super fund that gives you other featured benefits such for death, permanent disablement and income protection.  With these, you can reduce your outright expenses since premiums are deducted from your super account.

• Seek advice from the experts if necessary. For you to choose the right super fund, you may seek advice from a financial adviser to help you design a strategy that you are comfortable with. Most super fund packages have financial planning advice integrated into their fees while others offer it for free. So if you only need simple investment, you can do away with paying extra for financial advice.

• Accessibility of the super fund. Super fund is a form of investment and as an investor you want to keep track of your money placement. When you compare superannuation, make sure to look into the accessibility of the fund to monitor the progress of your investment.

Who is Able to Choose to Start a Super Fund?

The persons who can choose superannuation fund include:

• Employees working for several years already

• Self-employed individuals

• Fresh graduates who recently joined the workforce

Those who can freely choose a super fund must not be involved in any agreement or award. If involved in an agreement, the contract does not need superannuation fund support. You are eligible to choose your superannuation if fund is being paid through notional agreement preserving state award.

Knowing the Different Types of Super Fund

There are different categories of super funds. Generally there are three categories to which super fund falls. The first one is according to the amount a retiree will claim as a pension. The second type of super funds depends on who manages the fund and for whom. The last category is based on the manner a retiree may retrieve his super fund.

First Category – Pension Amount

• Accumulation Funds. In this type of super fund, the pension received depends on the amount paid by the person during the time he was working and the amount of money earned by the investment.  

• Defined Benefit Funds. The pension received by a retiree is based upon the age of retirement, length of work performed and the amount of the last salary received.  Pension is also dependent on the length of time contribution to the fund was done.

Second Category – Trustees and Members

• Industry Superannuation Fund. A type of fund run and composed of various employers of certain industry

• Employer Stand Alone Fund. A super fund set up by an employer to provide for their employer’s superannuation

• Master Trusts. This fund is managed by banks and other financial institutions and has a number of members. It can either be wholesale or retail master trusts.

• Public Sector Employees Funds. This is a fund managed by the government for government employees.

• Self Managed Superannuation. This fund is managed for a group of people counting to a maximum of four or five.

Third Category –  Manner of Fund Retrieval

• Commutable Allocated Pension. This is a type of fund that a retiree receives regularly on a monthly basis.

• Non-Commutable Allocated Pension. This type of fund allows a retiree to retrieve the entire amount of pension at a time.