MLC Superannuation Review: How do they measure up?

MLC superannuation is an Australian company servicing the community for many years. MLC is a one-stop shop for insurance, superannuation and investment. Read this MLC superannuation review to help weigh up if their offerings are right for you.

The Good

MLC superannuation is an established company
MLC’s superannuation arm is Australian owned
MLC superannuation has a number of funds to choose from
MLC superannuation can demonstrate good returns
MLC superannuation has insurance premiums which seem comparable to other funds
MLC superannuation funds offer a number of portfolios to match your investment risk profile
MLC superannuation portfolios offer a diversified spread of investments
MLC superannuation is actively managed – which can be a pro or con, depending on the fund’s performance
Tools and calculators available on the MLC website for your super and insurance needs

The Bad

MLC superannuation is a retail fund, so they’re in it to make money, rather than an industry fund that has profits benefit members
MLC superannuation is flagged by APRA as having high investment fees in 2021/22
MLC superannuation products don’t seem to show up high on the list on comparison sites such as Finder and Canstar
MLC superannuation, much like other funds, have “hidden fees”, such as the buy/sell spread that won’t show up on your statement, but will impact your retirement savings

Verdict: MLC Super is an established Australian company with many super and investment options, but there are better funds out there with lower fees.

Introduction

MLC superannuation¹ offers a number of retail funds to the public and businesses. MLC has offerings in superannuation, investment and insurance cover and has existed in Australia in one form or another for 130 years.

Choosing the right superannuation fund to partner with early in your working life can have a huge impact on your retirement savings.

Superannuation performance each year is important, but so are fees charged by the fund and the cost of premiums charged by the fund for Income Protection, Total & Permanent Disability and Death insurance.

High fees and insurance premiums can eat into your nest egg, so you should take them into account when choosing a super fund.

Contents hide

1 Introduction

2 What kind of super fund is MLC?

3 Is MLC an Australian company?

4 Is MLC an industry super fund?

5 Who owns MLC superannuation?

6 What are the super options through MLC?

7 What are MLC Super’s fees?

8 How does MLC superannuation perform?

9 MLC Superannuation insurance policies

10 How does MLC invest my super?

11 Does CaptainFi have super through MLC?

12 Advantages of MLC superannuation

13 Disadvantages of MLC superannuation

14 FAQs about MLC Superannuation:

15 Conclusion

CaptainFI is not a Financial Advisor and the information below is factual review information, not financial advice. This website is reader-supported, which means we may be paid by advertising on the site, or when you visit links to partner or featured sites. For more information please read my Privacy Policy, Terms of Use, and Financial Disclaimer.

What kind of super fund is MLC?

MLC Super Fund is a retail fund² on offer to the public. It differs from industry super funds, that historically, were offered only to people working in a certain industry.

Is MLC an Australian company?

MLC (Mutual Life and Citizen’s Assurance Company), was originally started in Australia in 1886 as the Citizens Assurance Company Limited. MLC has existed in a number of guises over that time while conducting business in insurance, superannuation and investments for retail, institutional and corporate customers. In the past, MLC has been owned in part by Lend Lease and National Australia Bank (NAB).

MLC currently exists as 2 entities, which are linked by name, but not by ownership:

MLC Wealth is part of Australia’s Insignia Financial Group and has an investment and superannuation focus, having been purchased from NAB in 2021.

MLC Limited is majority owned by Japan’s Nippon Life Insurance Group and offers insurance products (MLC Life Insurance). MLC Life Insurance uses the name MLC under license from MLC Wealth.

Is MLC an industry super fund?

MLC Superannuation³ is not an industry superannuation fund. This means entry to the fund is not restricted to those who are working in a specific industry.

MLC super is a retail fund offered to the public. This means anyone can join. However, retail funds are usually profit-making for the corporate owner, as opposed to industry funds, where profits benefit members.

“MLC has retirement solutions designed to help withstand economic volatility, giving you confidence that you can prosper in constantly changing markets. We offer competitive investment returns, tax efficient income stream options and investment protection solutions that help create a smoother ride in all market conditions, so you’re free to enjoy life in retirement.”
mlc.com.au/personal/nav_top/about-mlc/about-super-investments/about-us³

Who owns MLC superannuation?

MLC Super is owned by MLC Wealth, which is owned by Australia’s Insignia Financial Group. MLC Wealth is a financial services company offering investment and superannuation products.

What are the super options through MLC?

An MLC superannuation review shows MLC Superannuation offers customers a number of options⁴:

MySuper fund – MLC offers MySuper, and MySuper for NAB staff. If you start a new job and don’t choose a super fund, MySuper funds are a default option that your super goes into. The benefit of MySuper funds is they are low-cost and easy to compare.

MLC MasterKey Super Fundamentals – a superannuation account for retirement as well as during your employment years, which is easy to manage.

MLC Wrap makes use of an advisor to manage your portfolio. This option is for a more diversified portfolio, with the aim of reaching personal investment objectives.

MLC MasterKey Business Super is designed more for the corporate sector. This corporate super plan helps protect and not just grow your super.

MLC Superannuation options — There are several Super options through MLC – you can always reach out to a **financial advisor** to seek advice on what may be the best option for you

Beyond that, MLC Super fund offers 336 investment options for people who want more out of their super fund than just a default “set and forget” option.

The important thing to remember is, when choosing a super fund you can tailor an investment strategy to suit your risk profile. For example, you can choose to be growth-focused, or defensive-focused.

This makes comparing super fund performance tricky for the average worker, as you’re often comparing apples with oranges.

At the end of the day, if you follow Barefoot principles and aim for low fees, this can help boost your super balance over time. While low fees are important, so is not paying over the odds for insurance within the fund, like Income Protection, Total and Permanent Disability TPD and Life Insurance.

What are MLC Super’s fees?

MLC Super fees vary depending on what super product⁵ you’re investing in and what services you use. The following will look at MLC MasterKey Super, which is a step up from a default fund, and maybe the sort of super fund someone in the FIRE community may consider:

Administration fee:

· First $150 000 – 0.30% each year

· Over $150 000 – 0.10% each year

Investment fees (they won’t show on your account, but are part of daily unit pricing)

· MLC Horizon 4 Balanced Portfolio – 1.20% per year

· Other MLC investment options – 0.00% – 2.84% per year

Buy-sell spread

· MLC Horizon 4 Balanced Portfolio – 0.10%/0.10%

· Other MLC investment options – 0.00%/0.00% – 0.30%/0.30%

So for every $50 000, you’ll pay (or have deducted) $790 each year, comprising:

· Admin fee – 0.32% – $160 (compared to $78/yr for Hostplus Indexed Balanced fund)

· Investment fee – 1.20% – $600 (compared to 0.02% for Hostplus Indexed Balanced fund)

· Transaction cost – 0.06% – $30 (compared to 0.04% for Hostplus indirect cost ratio)

On top of that, there can be deductions for insurance premiums and using an advisor, not to mention tax.

“Super fund fees are unavoidable, but not all super accounts are created equal. Fees vary greatly by fund and investment type, but one thing they all have in common is they can be, according to the Productivity Commission (PC), “the biggest drain on net returns”.”
superguide.com.au/comparing-super-funds⁶

It’s important to remember that retail funds are in it to make money for the company. While fees of 1.20% may not sound like much, in reality, they can eat into your contributions and have a significant impact on what you end up retiring on.

What are average super fund fees? (superguide.com.au)⁶

MLC tools and calculators — There are tools and calculators on the MLC website to assist you with your super and insurance needs

How does MLC superannuation perform?

MLC Super is a significant fund in Australia. According to SuperGude.com.au, it ranks 7 out of 161 funds for 925 423 members. 40% of members are women and the average super amount is $83 000.

The Australian Prudential Regulation Authority (APRA) 2021/22 assessment of MLC’s MySuper product, rated it as “passed”. This survey looked at a range of criteria in assessing MySuper fund performance.

One MLC super fund option, MLC MySuper Growth Portfolio made the top ten in the SuperRatings Fund Crediting Rate Survey to Dec 2022 by doing better than the median compared to other funds over 1, 3, and 5 yrs. However, these results are before fees.

MLC super products don’t seem to show up on top of comparison sites like Finder⁷ and Canstar.

MLC Super products do show up on the APRA Heatmap, with their relatively high fees in comparison to other super funds (Alphabetical under Nulis Nominees – MySuper Product Heatmap | APRA⁸)

MySuper Quarterly Performance Update (mlc.com.au)⁹

MLC Super Fund guide: Performance, fees, USI, ABN, address, contact details (superguide.com.au)²

MLC Superannuation insurance policies

MLC super offers a range of insurance policies¹⁰ to choose from, with premiums being deducted from your super contributions. The advantage of paying through super is it can be a tax-effective way of paying the premiums. However, high insurance premiums can erode your super contributions, not leaving much to invest.

The premiums change with your age, line of work and amount of cover, so the following figures are for a male aged 30 with $500 000 Death Cover, $500 000 TPD and Income Protection for $100 000 gross earnings per year.

MLC super insurance policies¹¹ include:

· Death (which includes Terminal Illness): unlimited cover, with a lump sum paid to dependants. Terminal Illness cover can’t be more than $3million. Premium example – 30yr male, $500 000 cover = $475 per year.

· TPD – maximum cover of $ 5 million (but can’t go over the Death Insurance amount), with a lump sum paid to you if you can no longer work after becoming totally and permanently disabled. Premium example – 30yr male, $500 000 cover = $185 per year.

· Income Protection cover – usually up to 75% of monthly income, paid monthly if you temporarily can’t work. Premiums can be deducted by opting for a longer wait time before payments start ie 3 months, and for a reduced duration of payments ie 2yrs, rather than 5 yrs. 75% of $100 000/yr premium examples –- 3mth wait/2yrs duration = $59 per year. 1mth wait/5yr duration = $115 per year.

Remember, you need to meet eligibility criteria like being an Australian resident, be of insurable age and be in an insurable line of work. Also, your insurance may be cancelled if your account is inactive for a certain length of time. However, you may reach a stage of your FIRE journey where you don’t need insurance, like if you generate enough passive income to cover some of your expenses.

How does MLC invest my super?

How MLC Super invests your money depends on what super product you’re in, and what your risk profile is. The following is an example of MLC Horizon 4 Balanced Portfolio asset allocations:

· Private equity – 0-15%

· Australian shares – 10-40%

· Property – 0-15%

· Global shares – 15-40%

· Alternatives and other – 0-25%

· Infrastructure – 0-15%

· Fixed income (credit) – 0-20%

· Fixed income (diversified) – 0-30%

· Cash – 0-15%

MLC MasterKey Super & Pension Fundamentals Product Disclosure Statement⁵

Does CaptainFi have super through MLC?

No, I personally don’t have an account with MLC. I have my Superannuation in Hostplus. You can check out my review of Hostplus Super HERE.

Advantages of MLC superannuation

MLC superannuation is an established company
MLC’s superannuation arm is Australian owned
MLC superannuation has a number of funds to choose from
MLC superannuation can demonstrate good returns
MLC superannuation has insurance premiums which seem comparable to other funds
MLC superannuation funds offer a number of portfolios to match your investment risk profile
MLC superannuation portfolios offer a diversified spread of investments
MLC superannuation is actively managed – which can be a pro or con, depending on the fund’s performance
Tools and calculators available on the MLC website for your super and insurance needs

MLC superannuation info blogs — You can access information articles on the MLC website that answer many questions surrounding super products, fees and options

Disadvantages of MLC superannuation

MLC superannuation is a retail fund, so they’re in it to make money, rather than an industry fund that has profits benefit members
MLC superannuation is flagged by APRA as having high investment fees in 2021/22
MLC superannuation products don’t seem to show up high on the list on comparison sites such as Finder and Canstar
MLC superannuation, much like other funds, have “hidden fees”, such as the buy/sell spread that won’t show up on your statement, but will impact your retirement savings

FAQs about MLC Superannuation:

When was MLC founded?

MLC has its foundation in the Citizen’s Assurance Company started in Australia in 1886.

Does MLC Superannuation have exit fees?

No, there are no exit fees.

Was there a class action against MLC?

Prior to 2021, MLC Super was partly owned by NAB. After the banking Royal Commission in 2017 a class action was launched against NAB for “fee for no service”. ASIC’s case claimed some MLC MasterKey personal and business customers were charged for an advisor they didn’t use. NAB was penalised $57.5m by the Australian Federal Court.

Can I see my MLC superannuation balance online?

MLC Super has an online portal and app, so you can see your super balance at any time.

Can I easily transfer my super to MLC?

Yes, transferring your current super into an MLC offering is as easy as filling out a transfer form. However, keep in mind the impact it may have on your insurance premiums and whether your new fund will insure you for any pre-existing conditions.

Is MLC a good super fund?

Whether MLC superannuation funds are a good option, as always, comes down to preference. However, their high fees as flagged by APRA suggest there are better options out there if you want to keep your costs down, to maximise your retirement savings.

Conclusion

MLC superannuation is an established company offering a number of retail super funds catering to the public and business. MLC covers a number of bases, such as insurance, superannuation and investment.

Selecting the right super fund to set you up for a comfortable retirement is something you want to get right from the time you start working.

Annual super returns are important, but the impact of insurance premiums and fees eating into your retirement nest egg shouldn’t be underestimated.

While MLC superannuation shows good returns, they are a retail fund provider and are a company “for profit” and show up in the APRA’s 2022 Heatmap for high fees.

As with any super fund, don’t just have it as “set and forget”. The best thing you can do is pay attention to it from the start.