How do I pick a superannuation fund?

"What kind of superannuation fund should I have?" is a question I am often asked.

There is no simple answer because, like choosing a home loan, you need one that is right for your particular situation.

Naturally, fees are an important consideration, but I believe that transparency of fees is often a more important issue than the fees themselves. 

Fees do vary between funds, but so do the benefits - if the fees easy to understand you are well on your way to making an informed choice. 

Keep in mind too that the biggest fee you face is almost certainly going to be the 15% that the government takes out of every contribution your employer makes on your behalf. 

Next consider the ability to take out life insurance within the fund. Can you take insurance without a medical up to a certain figure?  Is the insurance available for any occupation or just a specified occupation? 

Does the cover reduce as you grow older, or are you free to choose a level payout figure as long as you pay a higher premium each year?  Does your fund offer income protection insurance?  

If so, is it to age 65 or just for two years?  What proportion of your salary is covered?

Most funds offer a wide range of investment options but keep in mind that the assets you hold inside super are usually only a part of the total family assets.  This is why it is important to agree on an overall asset allocation with your advisor and make sure the choice of funds within super is in line with that asset allocation. 

We have long recommended that retirees, or those nearing retirement, keep at least three years planned expenditure in cash.  At this stage in your life you will be either receiving an account based pension (allocated pension) or considering starting one. 

Make sure your fund lets you switch from the accumulation phase to the pension phase without penalty and also check that the choice of assets offered by your fund while you are in the pension phase allows you to hold part of your money solely in a cash account. 

If your fund does not offer a cash account you could be forced to drawdown growth assets such as shares when the market is having one of its inevitable down periods.