When choosing a superannuation fund, a lot of people want to choose the one that charges them the lowest in management and investment fees and gives them the best investment return. Data from the Australian Prudential Regulation Authority (APRA) shows that over the past decade industry super funds have consistently outperformed retail funds by giving its members higher returns*: that’s more money for your retirement.

What is the difference between an industry super and a retail super fund? Retail super funds are retirement funds established by financial institutions and insurance companies that were initially for white collar workers. As one may assume, these companies established retail funds with the intent that they generate profit for shareholders. The competing goals of profit and security for its members’ retirement funds are seen by some as problematic.

Retail funds tend to have a lot of added bells and whistles, for example advice. The chief executive of the Industry Super Network, David Whiteley, said this in an interview with the ABC in March 2010"For every 1 per cent extra paid in fees to a super fund, members are receiving one-and-a-half per cent less in returns," and that the average retail fund "is an underperforming and expensive fund."

Industry super funds are non-for-profit organizations that were started by unions and other industrial organizations for workers in the industries they represented. An industry super does not have shareholders to please. Industry super funds don’t pay commission to financial advisers and planners or to insurance companies, which are costs that eat into the value of your super.

The figures in recent years paint a clear picture. A 30 June 2009 SuperRatings study compared the net benefit of one of Australia’s most popular industry super funds to that of the average retail fund over a period of five years. The difference was staggering: the industry super out-performed the average retail fund by a difference of approximately $4000.Another SuperRatings study showed that another leading industry super fund on average returned $4.30 for every dollar deducted in fees over a five year period ending on 30 September 2010; the average retail super on the other hand returned only $1.70.

In March 2010, research by the Industry Super Network found that retail funds delivered 1.8% weaker annual returns on average when compared to their industry competitors. The Australian reported in December 2010 that industry super funds took all top 10 places in industry researcher Chant West’s ranking. These funds on average had an annual return that’s 4.3 per cent above the inflation rate over the past seven years.

Industry superannuation has consistently outperformed its retail counterparts over the past decade for another reason. Industry super funds generally invest in unlisted assets like infrastructure, private equity, and direct property. Retail funds, however, tend to invest in liquid assets, like shares, property, and bonds, all of which are tied to credit. This is especially worrisome after the global financial crisis that began in 2008.

Industry supers are a wise option for those who are concerned and cautious about their post-retirement financial security. While industry super funds were previously open solely to those within the industry the fund was started for, industry super funds are generally open for anyone to join regardless of their occupation since 2005.