Understand the basics of investing

At UniSuper, you will have either an Accumulation 1, Accumulation 2, Personal Account, or a Defined Benefit Division (DBD) account. How and when you joined, as well as your employment type will determine which of the four superannuation accounts you will have.

What is an Accumulation 1 account?

Accumulation 1 account holders can choose their own investments. It’s easy to manage and you can keep it throughout your working life regardless of whether you leave the higher education sector.

Accumulation 1 accounts are generally open to people who are on at least the minimum contribution percentage (currently 10.5% for FY23) who join through one of our employers.

Learn more about the features, fees, and other important information of Accumulation 1 accounts.

What is an Accumulation 2 account?

An Accumulation 2 account lets you choose your own investments and gives you greater control of your contributions and insurance.

Accumulation 2 accounts are open to members who had a Defined Benefit Division (DBD) account for less than two years.

Learn more about the features, fees, and other important information of Accumulation 2 accounts.

What is a Personal Account?

A Personal Account is easy to manage and can be taken with you from job to job throughout your working career. A Personal Account with UniSuper allows you to boost your superannuation savings with extra contributions at any time.

Personal accounts are open to all Australians aged 15 or over.

Learn more about a Personal Account with UniSuper.

What is a Defined Benefit Division account?

A Defined Benefit Division (DBD) account allows you to choose your own investments for the accumulation component of your superannuation. A DBD account is designed to give reliable growth over your life and give you better idea of how much you’ll have to retire on. The DBD is open to eligible higher education employees receiving 14% or 17% employer contributions.

Unsure which superannuation account you have?

You can find your membership on your UniSuper statement, via MemberOnline and the UniSuper App. Still unsure? Contact us on 1800 331 685 from Monday to Friday (Melbourne time).

Time plays an important role when it comes to investing. Generally, it’s your time in the market, not your timing of the market, that gives you the greatest chance of good long-term returns.

Some people may try to time markets by predicting when they’ll go up or down and then changing their investments. This strategy can be risky, as it’s difficult to predict what markets will do and getting the timing right can be tricky.

Why can it be risky?

If you change your investments in response to market movements, you’re often responding after the event. By switching an investment option that’s declining in value into an option that’s reaching its peak, you’re more likely to lose money.

Compounding interest is investment returns earned on your investment returns.

It happens when you reinvest your positive investment returns (which occurs automatically with super).

The longer you invest your super, the more time you’ve got to take advantage of compounding interest. The younger you are when you start saving for your retirement, the more time you’ll have to benefit.

An example: Sue and Ewen

Meet UniSuper members Sue and Ewen. They’re both 60 years old and have been regularly topping up their super with extra after-tax contributions.

For the purpose of this illustration, the modelling assumes an investment return of 8% p.a. No allowance has been made for tax or investment fees and charges. Please note that lower investment returns and/or periods of market volatility, and the inclusion of tax or investment fees and charges could change the comparison.

We’ve assumed both contributions ($2,000 each year and $5,000 each year) to be after-tax contributions. This example is for illustrative purposes only and doesn’t relate to any of UniSuper’s investment options. Figures are nominal values and haven’t been adjusted to reflect the impact of future inflation.

Sue invested less, but ended up with more

Sue invested $2,000 each year (less than $40 a week). Ewen invested $5,000 each year.
Even though Sue invested less money in total than Ewen, she has $125,000 more than Ewen.

Why? Sue had more time. Sue's 15-year head start meant that her money had more time to benefit from compound interest.

Inflation is a term used to describe a rise in the cost of living (measured by the Consumer Price Index or CPI).

Over the time your super is invested, the cost of living will generally rise. While $1 might have bought you a litre of milk 15 years ago, due to inflation you’ll need more than $3 to buy the same thing today.

Real return = investment return − CPI

It’s important to ensure the growth rate of your investment outpaces inflation. Otherwise, while the dollar amount of your balance may increase over the years, the actual buying power of your investment might not.

So, when we talk about the ‘real return’ from an investment, we’re talking about the return over and above inflation. At a minimum, your returns should keep pace with inflation. Ideally, to make real gains from your investment, your returns need to outpace inflation.

Our investment options aim to outperform CPI by a specific percentage (or more) each year. Exceptions to this are the Cash, Australian Bond and Australian Equity Income options, which target different types of objectives.