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What is a retirement savings account?

Retirement savings accounts are a very low-risk way to save for your retirement. They're a cross between a super fund and a savings account, but very few banks offer them today.

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By

Alison Banney

&

Richard Whitten

Updated

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What you need to know about retirement savings accounts

  • You put money in a retirement savings account and earn interest. But you can't access the money until you retire, like superannuation.
  • These accounts are capital guaranteed, meaning you can't lose the money you put there. But returns are lower than super funds.
  • Only a handful of companies still offer retirement savings accounts because most people have super funds now.

Which banks still offer retirement savings accounts?

According to APRA, these banks still offer retirement savings accounts (as of 2024).

BankAccount details
Qudos Bank
  • $0 account fees
  • Withdrawal fee only applies if you make more than 4 withdrawals per year
Defence Bank
  • Term deposit options available
  • Variable rates available
Australian Military Bank
  • Nominal administration fee
  • Term deposit options available
  • Fixed or variable rate options available

Some institutions offer retirement savings accounts but are no longer open to new customers:

  • IMB
  • Heritage and People's Choice Limited
  • Police Financial Services
  • Commonwealth Bank of Australia

Retirement savings account versus super fund

Although they aren't superannuation accounts, retirement savings accounts do fall within superannuation regulations and the tax advantages that come with that.

Access

Like a super fund, you can't access the money in your retirement savings account until you meet a condition of release or reach your preservation age.

Returns

Unlike a super fund, your capital is guaranteed. You earn interest at set rates, which can be fixed or variable.

But a super standard balanced or growth super fund will usually offer far higher returns than a retirement savings account. This is because super funds invest a large portion of your balance into shares, which are high return but also much higher risk.

Fees

You typically don't pay fees on a retirement savings account, unlike a super fund.

What happens when I retire?

When you retire you can access the money in your retirement savings account. Just like a super fund, you access the money as a lump sum or get a regular payment through an account-based pension.

What are the pros and cons of using a retirement savings account?

The pros

  • Less risk. Retirement savings accounts are capital guaranteed, meaning the money you put in the account is protected from any losses.
  • Fixed or variable options. Many retirement savings accounts offer a variable rate option or fixed terms, like a term deposit.
  • Tax advantages. A retirement savings account offers the same tax advantages as a superannuation account. Contributions you make to the account are taxed at a lower rate than your income would be.
  • No fees. Most retirement savings accounts do not charge any joining fees, ongoing account keeping fees, administration fees and commissions.

The cons

  • Hard to find. Retirement savings accounts were introduced as a way to help Australians save for retirement, before everyone had a superannuation account. These accounts are increasingly redundant and rare today.
  • Low returns. These accounts generate much lower returns on your money than other superannuation products. Even a conservative super fund would likely deliver much better returns than a retirement savings account.

What to look for in a retirement savings account

As we said earlier, there are very few retirement savings accounts available today. If you do want to open one, look for the following:

  • Competitive interest rate. A higher rate of interest will help your retirement savings work harder. This is especially true if it's compounded daily. However even with a high interest rate on your retirement savings account, you'll likely earn much better returns with a superannuation fund that is actively investing your balance.
  • No fees. To ensure that every dollar you deposit helps you save for your retirement, you should look for a retirement savings account that changes no account keeping fees and no annual fees.
  • Account access. Your retirement savings account provider should let you view your account details online or via a mobile banking app. Some service providers offer online tools that allow users to search for their lost super, which they can then transfer to their new accounts.

Tips for using a retirement savings account

Read the terms and conditions

Make sure you go through the product disclosure statement (PDS) before signing up for any retirement savings account. The summary page of this document should give you a clear indication of any applicable fees and charges.

Compare against super funds

Before opening a retirement savings account, conduct a thorough super funds comparison to ensure you've found the most suitable account for your needs. Compare the rates on a retirement savings account to the average returns for super funds before deciding.

But keep in mind that super funds also charge fees. And returns aren't guaranteed.

Consider your age

Most Australians who are still in the workforce and are in their 20s, 30s or 40s are still a long way from retirement. If you're in this age group you'll probably already have a super fund and can benefit from the (on average) higher returns. You can also afford to weather any short term downturn because you're years away from retirement.

If you're closer to retirement, the smaller but safer returns of a retirement savings account might be more appealing. It's still worth comparing to super funds with more conservative growth options.

Get expert help

Still confused? Talk to a financial advisor or financial planner about how to best structure your retirement finances.

Alison Banney's headshot
Written by

Editor

Alison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds. See full bio

Alison's expertise
Alison has written 645 Finder guides across topics including:
  • Superannuation
  • Savings accounts, bank accounts and term deposits
  • Budgeting and money-saving hacks
  • Managing the cost of living
Richard Whitten's headshot
Co-written by

Editor

Richard Whitten is a money editor at Finder, and has been covering home loans, property and personal finance for 6+ years. He has written for Yahoo Finance, Money Magazine and Homely; and has appeared on various radio shows nationwide. He holds a Certificate IV in mortgage broking and finance (RG 206), a Tier 1 Generic Knowledge certification and a Tier 2 General Advice Deposit Products (RG 146) certification. See full bio

Richard's expertise
Richard has written 536 Finder guides across topics including:
  • Home loans
  • Property
  • Personal finance
  • Money-saving tips
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12 Responses

    Default Gravatar
    JulietOctober 11, 2016

    My only super account was closed due to bad mail redirection and the balance was sent to the ato. I contacted the ato and they said I should open a retirement savings account which has less fees. I don’t know much about super and rsa’s as I have spent most of my life unable to work much. What should I do to get this small amount 2000 as I now have a terminal disease. and need this money. The ato says they wont release it until I am 65 but I am not likely to make it to that age

      AvatarFinder
      ClarizzaOctober 12, 2016Finder

      Hi Juliet,

      Sorry to hear about your situation.

      If your account was closed, it may have been transferred to another super fund that holds unclaimed super or transferred to the ATO.

      You can log into myGov via the ATO website to find the super and organise to transfer it to your account. Otherwise, our guide on finding unclaimed super may also be of help.

      Regarding a retirement savings account, it works like a savings account but generally with a higher rate of interest. You can transfer your super into this account.

      Hope this has helped.

      Clarizza

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