The media has been exploding with attention on the Royal Commission into the Banking and Financial Industries (Link here for more information). With all of this information bombarding the public, it's a little wonder people are skeptical about the big banks and their super funds.
Although somethings are simply out of our control, there are a few little things we can do to regain some power.
Here are 5 things you can do today to take control of your super:
1. Have a look at the Investment Option your super is currently invested in for you within your fund. You should make sure that it is in line with your Risk Profile and your time horizon until you can access your super money. Generally speaking the longer, you have until you can access your super (which for most under the age of 56 is 60 years old) the more aggressive you can be in your investment selections. What has grabbed the media’s attention is the amount of super money that has gone into what they call the default option, and while these vary between funds, it is generally what they call a Balanced Option which means that it is balanced between investing in Cash/ Fixed Interest and Growth Assets such as shares. This can have a huge impact on the total superannuation amount for a person who has 10 + years until retirement.
Say a balanced fund is returning 6% per annum as opposed to a High Growth fund (invested mainly in growth assets such as shares) which is returning 9% per annum. For a 30 year old earning $80,000 per annum and a starting balance of $20,000 in super the difference this makes is staggering:
After 30 years – Balanced Option, Super Balance is $946,626
High Growth Option, Super Balance is $1,618,772
That’s a whopping $672,146 difference!!
2. Check your fees on your account. As of the end of September 2017 all funds with the exception of Self Managed Superannuation Funds need to disclose all their costs, and you can find the costs for your own superfund in their Product Disclosure statements which are found on each funds website. The fees will not always be on your superannuation statement. There are also websites where you can check the fees and compare your superfund such as Canstar and SuperRatings.
3. Make sure your employer is paying your superannuation at least quarterly. We all assume that our employer will do the right thing but it isn’t always the case, so check your money is going into super when it should be and for the correct amount.
4. Check the Insurance on your fund. Many funds offer default insurance, which you pay for out of the fund. So check what you are paying for is what you need, or enough to meet your needs if a crisis arises.
5. Consider consolidating. If you have more than one fund it might be worth consolidating into the one fund to save on fees, but make sure that you have considered any insurance that might be a fund that you wish to close.As you will lose any insurance benefits if these funds are closed.
As always this is general advice only, and if you would like advice specific to your situation please seek advice from a professional adviser.
- The Wealth Genie
Michele Purvis is an advisor with over 30 years experience working in the accounting and financial services industry helping clients to define and create their wealth.