Compare government super funds

Government funds – also known as public sector funds – are superannuation funds set up for employees working in the public sector, such as employees of state or federal governments. 

While there are a dizzying array of Australian superannuation funds available, public sector employees often have an easier task than most of us when it comes to choosing a super fund, because it may be done for them. Some government super funds offer defined-benefit funds and constitutionally protected funds to their members. For this reason, some public sector funds are not available to non-government employees.

However just because you’re a state or federal government employee, doesn’t mean you’re obliged to invest your retirement savings in a public sector or government fund. The federal government changed superannuation laws in 2005, giving Australian employees the choice of what fund their employer's superannuation guarantee contributions were paid into.

Additionally, many government super funds have opened up to all Australians, so even if you're not a government worker, you can still potentially benefit from a public sector super account to enjoy a more comfortable retirement, with less reliance on an age pension.

• Employers may contribute more than the 9.5 per cent minimum each financial year
• Often there’s a limited range of investment choices
• Long-term members may have defined benefits, whereas newer members are usually in an accumulation fund
• They offer lower fees, and some offer MySuper accounts
• Profits are put back into the fund for the benefit of all members

There are a range of superannuation funds available to public sector employees, some of which are owned and operated by the federal government for the benefit of its employees. Other funds are offered exclusively to state government employees within each of Australia’s states and territories.

The federal government established the Commonwealth Superannuation Corporation (CSC), the trustee responsible for managing the Commonwealth superannuation schemes. CSC schemes are set up solely to meet the superannuation needs of Australian government employees and members of the Australian defence forces.

Commonwealth superannuation schemes aim to maximise members’ benefits and act in members’ best interests, responsibilities which are protected by law. The purpose of government funds is to provide a range of superannuation services to public sector employees structured in a way that meet (what can be) complex employment arrangements.

Federal public sector employees who do not have a choice of fund generally will have superannuation provided through:

• The Commonwealth Superannuation Scheme
• The Public Sector Superannuation Scheme

Each state government offers its employees a choice of default fund (offered to state government employees only).

An example of the public sector fund for each state and territory is as follows:

• QSuper is the default superannuation fund for Queensland government employees, and became a public offer fund in 2017.
• Only WA public sector employers can make employer contributions to GESB Super.
• State Super is the primary fund associated with the NSW state government.
• Super SA has a range of superannuation schemes for SA public sector employees.
• VicSuper was originally a Victorian public sector fund, however in July 2000 it became open to everyone.
• The NT Superannuation Office administers a range of NT public sector schemes.
• RBF is Tasmania’s public sector superannuation fund and has been Tasmanian-owned since it was established in 1904.

State and federal employees often benefit the most from government funds, because these types of superannuation funds have been designed to accommodate their salary and wage structures. Some government super funds have also opened their membership up to the Australian public, allowing workers in other industries to benefit from some of the fund's features.

Government and/or public sector funds offer members a tax-effective investment structure designed to assist public sector employees to maximise their superannuation investment. They operate under a similar premise to industry super funds in that they are not-for-profit entities. So there are no commissions paid, and all net investment returns are passed on to members.

Most superannuation funds available to public sector workers will also provide a salary sacrifice option as well as varying levels of death and total and permanent disability (TPD) insurance.

In some cases, government and/or public sector funds allow members to create an account for their partner.

As a public sector or government employee, you have the choice to invest your superannuation wherever you want. You are no longer obliged to stick with your public sector fund, unless you’re a federal or state public sector employee exempt from choice by law or regulations. If you don’t know whether this is your situation, a quick check with your employer will clarify.

If you’re a long-term government employee, there may be a financial benefit to keeping your superannuation savings with your default super fund.

As a public sector employee, you might want to change your super fund because:

• Your current fund is not available with your new employer
• You want to consolidate superannuation accounts to reduce fees and paperwork
• You want a lower-fee and/or better service superannuation fund
• You simply want a better-performing superannuation fund.

To help you decide, it’s wise to speak with an accountant or financial adviser. Many of the older public sector funds no longer take new members, and only exist for old members.

Some of these older superannuation funds offer members fully defined untaxed superannuation schemes. This means that your benefits do not depend solely on contributions and earnings. Your benefit may depend on other factors, such as your years of service or average salary.

So before you consider changing your super fund, make sure you understand what benefits you may be letting go in search of a better fund.

While a few government super funds allow non-government employees to be members, many of these funds exist to serve state and federal government employees only, and have strict eligibility requirements. 

However, if low fees are a priority for you – which is a feature of a public sector fund – an industry super fund might appeal.  

Industry super funds are membership-based and do not have shareholders. Most industry super funds exist to benefit members, have lower fees and don’t pay commissions to financial planners. 

On the other side of the coin, a retail super fund might promise better returns even though it does pay dividends to shareholders and may charge higher fees.

If you have the expertise and financial resources to consider managing your own superannuation, a self-managed super fund (or SMSF) might be the next step on from your public sector fund.

If you'd prefer to keep things straightforward, you might want to explore a MySuper account - a low-cost and simple super product that some employers offer as their default super fund. A MySuper account offers low fees, simple fee structures and is simple to use. 

Super funds that offer a MySuper account, must give you at least one investment option and a standard, default level of life and total and permanent disability (TPD) insurance.

Other features of a MySuper product include:

• An easily comparable fee structure, with a set list of allowable fee types
• Restrictions on how advice is provided and paid for
• Rules governing fund governance and transparency

Remember that if you have multiple super funds currently existing in your name, you can consolidate these savings by rolling the funds together, either through your chosen super fund or by contacting the Australian Taxation Office (ATO).