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30/07/2020

Is your super fund right for you?

Since the Superannuation Guarantee (SG) was introduced in 1991, working Australians have become accustomed to ‘forced savings’ in an attempt by the government to reduce reliance (and pressure) on the old-age pension.

For many people, it’s ‘out of sight, out of mind’. We simply don’t put enough thought into it, mostly because it’s usually not us making the contributions but our employers. Many Australians have no idea how much super they have at any given time. For many self-employed people, it’s barely a ‘thing’ as they often struggle to pay themselves and keep ahead of their bills, much less put aside money for their retirement.

A couple of years ago, the Australian Productivity Commission and the Hayne Royal Commission identified prevalent overcharging, underperformance and low-care factor levels by some super managers when it came to how their member’s funds were growing (or not).

High fees that don’t make sense, so-so performance, little to no help when you make an enquiry. Should you switch funds? Can you switch funds? How much longer do you wait to address those niggling questions to yourself? And how much money are you potentially losing the future you.

But what’s the benchmark? How do you even know if you have the right type of super for your particular circumstances, when most employers just pay their obligation for you with little to no direct involvement by you? Often into their preferred fund not yours.

With the Global Covid-19 pandemic reeking economic havoc across the world, Australian workers are now taking more of an interest in their personal finances and future economic security.

Recent allowances by the Australian government has provided an opportunity to those of us struggling financially to ‘dip’ into our super. Others are curious to see exactly how much the kitty holds and if it’s taken a hit or not.

Where do you start?

If you’d like to compare over 90 Australian super funds, you can start by clicking here.

Get to know your fund a little more. Find the most recent annual statement and see what kind of information it provides. Do you understand it?

The statement should tell you the balance (at the time of the statement) and how your money is invested. The type of investments and the investment mix applied to your fund. Are you high growth or conservative? Your statement should show returns and growth in your balance over time, fees and the type and level of any insurance cover you have. It will also provide details of any beneficiaries or your legal representative – and whether you have made a binding or non-binding nomination. (Whilst a binding nomination ensures your super ends up where you want it to, it will need to be updated every three years.)

What about your risk profile? High risk or low? Do you know?

Based on how many years you have left in the workforce, are you comfortable with the projected end game? Does it look like it will be enough? How volatile might it be (based on your risk profile)?

From here you may be able to determine if your fund is working for you or if you should be shopping around for an alternative. There are often recommendations by friends, co-workers or family. Alternatively scouring the web for forums, reviews and articles may also help with your research. Your own fund’s website may offer options for you to consider along with helpful articles, tips and other resources.

However, if you’re like most Australians, you may find it all a bit confusing, time consuming and perhaps even scary. This is where a good financial planner can help. He or she can build an investor profile for you and make recommendations from there. Some of the areas you will need to look at is your age (i.e. time to retirement), your aversion to risk (and subsequently growth) and insurances.

If you want to be a little more ‘hands-on’, you can look at direct investments in shares, term deposits and exchange-traded funds (EFTs). If you prefer to have more control, you can look at the Self Managed Super Fund (SMSF) option.

If you are unclear how to benchmark your fund and see if it’s right for you, please contact us at info@pillarfin.com.au or call us on 1300 730 309 and we’ll arrange for a review of your existing super. If you’re a member of the Pillar community, the review will cost you nothing. When it comes to something as important as your retirement, time wasted on the wrong path can be devastating. Take the initiative now to review your super to avoid possible regrets in the future.

The information provided herewith is general only and not intended as financial or investment advice and should not be construed or relied on as such. Before making any commitment of a financial nature you should seek advice from a qualified and registered financial or investment adviser.