Planning for retirement is a big part of managing your finances, and one decision that often comes up is whether to take more control through an SMSF or stick with an industry or retail super fund.
Each option offers something different. Some people like the idea of being hands-on and choosing exactly where their money goes. Others prefer a more straightforward path with professionals handling the details.
In this guide, Trusted Finance Solutions will help you understand how each type of super fund works, so you can compare your options and consider which one may suit your goals and lifestyle.
How SMSFs Work Compared to Industry and Retail Super Funds
SMSFs and industry or retail super funds all aim to help you boost your retirement savings, but they operate in very different ways.
- SMSFs – Private super funds that you manage yourself. You become the trustee (either individually or through a corporate structure), meaning you’re legally responsible for compliance, investment decisions, and administration.
- Industry super funds – Generally not-for-profit funds with profits returned to members. They’re managed by professional trustees and designed to offer simple, low-cost options.
- Retail super funds – Operated by banks or investment companies. They typically offer a broader range of investment options, though this often comes with higher fees.
All three are regulated under Australian law, with SMSFs overseen by the ATO and industry or retail funds regulated by APRA.
Investment Control and Choice: DIY vs Professional Management
One of the main benefits of a Self-Managed Super Fund (SMSF) is the level of investment control it offers. Unlike traditional super funds, SMSFs allow you to take a hands-on approach to how your retirement savings are invested.
An SMSF gives you access to a wide variety of investment options, such as:
- Residential or commercial property (provided it complies with superannuation rules)
- Direct shares listed on the ASX
- Managed funds and ETFs
- Term deposits and high-interest savings accounts
- Even alternative assets like cryptocurrency or collectibles (though these are higher risk and subject to strict rules)
In contrast:
- Industry super funds typically offer a small selection of pre-mixed investment portfolios, such as conservative, balanced, or high-growth options.
- Retail super funds often offer greater customisation and a broader range of asset classes, while the investments continue to be managed by professionals on your behalf.
If you’re confident managing your own investments or interested in exploring unique assets like property through your super, an SMSF may offer greater flexibility. However, with that flexibility may come added responsibility and increased risk, depending on how the fund is managed.
Fees and Costs: Comparing What You’ll Pay
The cost of managing your super can vary significantly depending on whether you choose an SMSF, an industry fund, or a retail super fund. Since fees can directly impact your retirement savings over time, it’s important to understand how each fund structure charges.
SMSF costs may include:
- Set-up fees – Usually range from $1,000 to $2,000, depending on whether you use an SMSF provider or establish it independently.
- Annual running costs – Often between $2,000 and $6,000+, covering accounting, auditing, tax lodgements, ATO compliance, and administration.
- Professional advice – If you outsource investment strategy or ongoing compliance, this can add further costs.
Many SMSF costs are fixed, which means they can take up a larger portion of your balance if you’re starting with a smaller fund. According to the ATO, SMSFs with balances under $200,000 may not be cost-effective compared to other types of super funds.
Industry and retail fund fees typically include:
- Administration fees
- Investment management fees
- Indirect costs (which can sometimes be harder to identify)
- Insurance premiums (often bundled)
These fees are usually percentage-based, so they rise or fall with your super balance. For amounts under $250,000, industry or retail funds may offer better value due to lower upfront costs. As your balance grows, an SMSF could become more cost-effective, especially if you keep management and advice costs under control.
To compare options, the ASIC Moneysmart Super Fund Calculator can help you estimate the long-term impact of fees on your retirement savings.
Performance Potential and Risk Exposure
There’s no guaranteed winner when it comes to performance. A well-managed SMSF has the potential to outperform retail funds, but it can also underperform if investment decisions are poorly made or not actively monitored.
- Industry super funds have historically shown strong returns, especially not-for-profit ones. According to SuperRatings, many top-performing funds have consistently delivered 7–9% annualised returns over 10 years.
- Retail funds can deliver mixed results. While some perform well, others may fall behind due to higher fees or less effective investment strategies.
- SMSF performance varies based on how well the fund is managed. Strong investment choices can lead to good results, while poor decisions may lead to weaker returns, especially in volatile markets.
Compliance, Administration, and Legal Obligations
If you’re thinking about setting up an SMSF, it’s important to understand what you’re taking on.
SMSF trustees are legally responsible for:
- Preparing and lodging the SMSF annual return
- Appointing an approved SMSF auditor
- Creating and maintaining an investment strategy
- Ensuring the fund is run solely for retirement purposes
- Staying compliant with the Superannuation Industry (Supervision) Act 1993
Failing to meet these responsibilities could result in serious consequences, including penalties, trustee disqualification, or the fund being classified as noncompliant, which might result in significant tax liabilities.
By comparison, industry and retail super funds manage all compliance and administrative tasks on your behalf. As a member, you’re not responsible for regulatory duties and can take a more passive role in managing your super.
Insurance, Member Benefits, and Estate Planning Differences
Industry and retail super funds usually include insurance by default. This often covers:
- Life insurance
- Total and Permanent Disability (TPD) cover
- Income protection insurance
These policies are typically offered at group rates with automatic acceptance up to certain limits, making them convenient and potentially cost-effective.
SMSFs, on the other hand, require you to organise insurance separately. While trustees are required to consider insurance for members, the fund does not include it automatically, so you will need to arrange and manage cover on your own.
When it comes to estate planning, SMSFs allow for more control, such as nominating reversionary pensions or structuring death benefit payments. But this can also add complexity and the need for legal advice.
Minimum Balance and Cost-Efficiency Considerations
There is no legal minimum required to set up an SMSF, but many financial advisers and the ATO recommend having at least $200,000 to $250,000 in super to make it worthwhile.
Why does your balance matter?
- SMSFs come with fixed costs such as accounting, auditing, administration, and compliance. These expenses stay the same no matter how much super you have in the fund.
- For smaller balances, these fixed costs take up a larger percentage of your total super, which can reduce your overall returns.
- By contrast, industry and retail super funds charge percentage-based fees. This means the fees are proportionate to your balance, making them generally more cost-efficient for lower super amounts.
If you are not planning to increase your SMSF balance quickly or do not have specific investment needs, a traditional super fund may offer better value until your savings reach a more efficient level.
Which Super Fund Structure Should You Choose: SMSF, Industry, or Retail?
Choosing between an SMSF and a traditional super fund depends largely on your balance, risk tolerance, desired level of involvement, and investment preferences.
An SMSF may suit:
- Investors with $250,000+ in super who want more control
- Those wanting to hold business premises or investment property within a super
- Families wanting to combine super balances and manage them together
- Financially-savvy individuals who can manage compliance or are willing to engage specialists
On the other hand, industry and retail super funds may suit:
- Those with lower balances
- People who prefer a “set and forget” approach
- Anyone wanting built-in insurance and administration
- Individuals not comfortable taking on legal and investment responsibilities
To help you decide which type of super fund might suit you best, here’s a side-by-side comparison of the key differences:
| SMSF | Industry Super Fund | Retail Super Fund | |
| Who Manages It | You (as trustee) | Professional trustee | Professional trustee |
| Investment Control | Full control (shares, property, crypto, etc.) | Limited investment options | Broader range of managed investments |
| Compliance Responsibility | The trustee is legally responsible | Handled by the fund | Handled by the fund |
| Setup & Admin Costs | Generally higher and fixed (can range from $2,000–$6,000+ annually) | Low, percentage-based fees | Varies, may include admin and adviser fees |
| Minimum Recommended Balance | Typically $200,000+ for cost-efficiency | No minimum | No minimum |
| Insurance | Must be arranged separately | Often included by default | Usually included or optional |
| Estate Planning Flexibility | Highly customised options available | Standard processes | Standard processes |
| Suitable For | Experienced investors, business owners, families combining super | Workers wanting simple, low-fee options | Individuals wanting professional advice and investment variety |
This table outlines the key differences to help you decide which super fund option may better align with your financial goals. If you’re unsure, a licensed financial adviser or experienced SMSF mortgage broker can guide you through your options based on your situation.
Need help making the right choice? Get in touch with our mortgage brokers in Melbourne for personalised support and guidance.
Ready to Choose the Right Super Fund? We’re Here to Help
Choosing between an SMSF and an industry or retail super fund isn’t a question of what’s better—it’s about what’s better for you. SMSFs offer control and flexibility, but with added responsibility and complexity. Industry and retail super funds offer simplicity and built-in support, but less customisation.
Each option can support your retirement goals in different ways, depending on your personal circumstances, financial knowledge, and preferences.
If you’re considering your options and want expert guidance, Trusted Finance Solutions, your premier mortgage broker in Moonee Ponds, is here to help you make an informed and confident choice.
Get in touch today to explore the super structure that fits you best.
Frequently Asked Questions (FAQs)
Yes, switching is possible. If you have an SMSF and decide it no longer meets your needs, you can close the fund and transfer your super back into a retail or industry fund. Similarly, you can leave a retail or industry fund and start an SMSF if you’re ready to take on the responsibility. Just keep in mind that switching involves paperwork, time, and possibly some costs.
Yes, you’re allowed to have multiple super accounts, including both an SMSF and a retail or industry fund. Some people choose this approach during a transition period or to keep certain insurance policies active. However, having more than one super fund can mean paying extra fees, so it’s important to keep track of what each fund offers.
In some cases, yes. This process is called an in-specie transfer, where certain assets like ASX-listed shares or business real property can be transferred into your SMSF. However, not all asset types are eligible, and there may be tax implications such as capital gains tax. The rules are strict, so any transfer needs to follow superannuation laws carefully.
If you move overseas permanently, your SMSF could become non-compliant if it no longer meets the residency rules set by the ATO. This could lead to serious tax consequences. Industry and retail super funds are easier to maintain while living overseas, as they are professionally managed and don’t have the same trustee requirements.
Yes, SMSFs must follow strict rules about what they can invest in. The fund must be used only for retirement purposes, and any investment must meet the “sole purpose test.” You can’t buy assets that provide immediate personal use or benefit, like a holiday home or artworks for your own enjoyment. Investments also need to be made on commercial terms, as if dealing with a third party.
