Scenario

Tom (24) is a university student in his final year of a combined Bachelor of IT/Science degree. He is considering undertaking his research masters in environmental sustainability after graduation, as it is an area he is passionate in.

For the past five years, Tom has worked in different industries and with different employers in several casual or part-time jobs while managing his study. He recently started a new job as a programmer in Sydney and his employer has asked which superannuation fund he wants his super to be paid into. Tom feels a bit uneasy about choosing a super fund, as he has heard that the government has named a few super funds as underperforming. While he has seen some advertisements for MySuper on YouTube, he is not sure which one is best for him and is considering whether it might be better to keep his super balance of around $18,500 spread across several superannuation accounts in different funds to avoid losing all of his super to a dud fund.

Requirements

1.

2.

Help Tom to arrive at a decision by providing him with a comparative ranking of five (5) superannuation funds and justify your selection and ranking. Advise Tom on whether it is a good idea to maintain several different super funds. (10 marks)

Determine if Tom would be better off using a MySuper product (if offered), or another investment option(s) offered by your top-ranked fund. Base your recommendation on the differences between the funds in the ranking provided and Toms personal characteristics including any drawbacks of whichever investment option you propose. Since Tom seems to know little about MySuper, you should explain to him each of the following points:

the purpose of MySuper products; if the funds MySuper option (if offered) meets the objective of MySuper; and if the MySuper option is the best choice for Tom (why/why not).

(10 marks)