Compare corporate super funds

There are two main types of super funds in Australia: defined benefit funds and accumulation funds, with the latter being the most common. Within these are various super categories (explained further in guide). One of which is corporate super.

Corporate superannuation is a category of super funds offered by corporations, like Telstra, and are available to employees of said corporation. If the corporate super fund has great returns and offers even more benefits to its employees, it can help a corporation stay competitive for employees in the industry.

Corporate super funds are generally available to ex-employees and even relatives of current employees. Super Guide notes that funds run by the employer, or an industry fund, are generally “not-for-profit” and “low to medium cost, especially for large corporates”. Further, most are “accumulation funds, but some older funds may be defined benefit”.

As mentioned above, the two main types of superannuation are accumulation funds and defined benefit funds.

According to ASIC’s MoneySmart, here are the fundamental differences:

Accumulation funds

"In an accumulation fund, your money grows or 'accumulates' over time. The value of your super depends on the money that you and your employers put in (known as super contributions), and on the investment return generated by the fund.”

Defined benefit funds

“In a defined benefit fund, your retirement benefit is determined by a formula instead of being based on investment return. Most defined benefit funds are corporate or public sector funds. Many are now closed to new members. Typically, your benefit is calculated using:

• the money put in by you and your employer
• your average salary over the last few years before you retire
• the number of years you worked for your employer”

Within these two main super fund types, there are a few categories your fund may fall into: corporate, retail, industry or public sector.

• Retail super funds.Retail funds are run by banks and other financial institutions, such as Commonwealth Bank, ANZ, Westpac, and more. They help to generate profits for shareholders. They tend to come with a wide range of investment options but may be recommended by financial advisors being paid commissions or fees.

• Industry super funds.Industry super funds were first established in the 1980s to protect Australian workers within certain industries from the types of fees and commission products found in retail super funds. In fact, industry super funds do not pay commissions or incentives to financial advisers. Anyone can join the larger industry funds, with smaller industry funds typically operating only for those working with in certain industries.

• Public sector super funds. Also called government super funds, as the name suggests public sector funds are for government employees. They are not available for non-government employees. They are a competitive fund type due to their perceived benefits, including some employers contributing more than the 9.5 per cent super guarantee minimum, long term members have defined benefits, lower fees on average and a modest range of investment choices.

• Corporate super funds. As noted above, corporate super funds are organised by employers for their employees and can be a competitive draw for the organisation when trying to bring in talent. The corporate fund is generally kept available for ex-employees and current employee family members. Some corporate super funds may be managed by larger funds and come with a wider range of investment options.

You may also choose to instead opt for a self-managed super fund (SMSF). This is a personal superannuation account that gives the individual complete control over the investment strategy of the funds. SMSFs have similar benefits to the professionally managed funds listed above, such as concessional tax rates.

As an employer, having a corporate super fund can help you to remain competitive within your industry as a highly recommended corporate super fund can be a draw for talented employees.

For employees, you can choose to be more selective about who you work for if you factor in the rate of return, fees and benefits associated with a corporation’s super fund into your job search.

A corporate super fund may also offer automatic life insurance and total and permanent disability (TPD) insurance. According to Atlus Financial, some funds even include “income protection without medical underwriting, and this benefit usually stays with employees as long as they’re employed by you”.

Employees in corporate super funds may also take advantage of additional benefits, such as discounted gym memberships, health insurance and travel insurance discounts and more. Be sure to read the product disclosure statement of a corporate super fund for a full break down of any fees and perks before applying.

Much like any super fund, it’s crucial that you compare the investment options, fees and insurance offered before you commit. Just because a company is up-selling its corporate super fund, doesn’t mean you shouldn’t do your own research.

While the exclusivity of a corporate super fund can be a huge draw for employees, it can also be a disadvantage. Some corporations will not allow ex-employees to participate in the funds. By being forced to switch funds, you may be hit with an exit fee from the corporate super fund. 

Further, if you’re not planning on sticking around with the company for a few years as a minimum, this type of fund may not suit your financial situation. You may miss out on high returns by switching funds so frequently. By making yourself an ex-employee, you're potentially losing out on the employee benefits associated with your corporate super account, as well as any fee discounts. 

Further, employees who leave a corporate super fund will need to double check their insurance policies and insurance cover through the fund. By switching to a new fund, you may not receive the same cover – especially if you have a pre-existing medical condition or are aged 60 or over.

If you’re unsure whether switching super funds or choosing a corporate super fund is the right financial decision for you and your family, consider seeking independent financial advice from a financial adviser.