Dr Steve Enticott, and CIA Tax are tax experts and a financial media presenter recommended by First Option Bank.
For those who are not self-employed, super is like a bonus: it isn’t money you see go into your bank account on payday so it’s often not something people think about until they reach a point in their working lives where they are considering their financial future.
It is, however, definitely worthwhile thinking about your super because it is real money and it’s your money. One day you’re going to get it (or your kids or beneficiary will get it) so take care of it.
The first important thing to consider is whether your super fund is a good one. They absolutely aren’t all the same: some perform better than others, some charge higher fees, some include extra ‘features’ which you may not need and charge you for having them.
The good news
The Australian government has made some really good moves recently to make super funds transparent. It’s ridiculously easy now to look up your super fund(s) on the ATO website and compare their performance, fees and investment strategies against other funds.
Even better – the government is making a few really terrible funds write to their own members to tell them “hey, we’re a really terrible super fund” and the government is also providing tools for you to quickly and easily move your super over to a better-performing fund.
Do you know where your super is? Who is managing it for you? What their investment strategy is? Do you agree with where they are placing your money?
The first step to taking control of your super is to educate yourself on your current fund. Research them, their history, their people and their investment policies and whilst you’re online; do a little research into other super funds to see if there might be one which resonates better with you and your position.
Think about the reality of your end goal – are you hoping to retire early from working to live a life of fun and luxury? Kudos to you if you can, you certainly won’t be the first person to do it but achieving it will probably take some significant financial strategising. If you are planning to work until the recommended retirement age and relax with an income to live comfortably then your super goals will be different.
No one super fund can be right for everyone so it is important to ensure your chosen fund suits your personal strategy, and if it doesn’t then don’t be afraid to move it to one that does.
Fees and taxes
With some super funds your investment can be subject to a range of fees and charges from the institution itself or from government taxes, if you have multiple super accounts then you’re quite possibly paying multiple management fees. These can add up to thousands of dollars over your contributing life but can be minimised easily by making sure you know where you have super invested, and combining them into one fund.
Unnecessary insurance
You may not even realise if your super policy includes payments for premiums directly from you employer contributions to your fund’s life insurance. If you have your own life insurance including things like income protection and injury benefits then you may well be duplicating your cover and paying for both. There have been critical reviews of some super-provided insurance products so if you plan to use your super fund’s life insurance, educate yourself on what it includes and make an active decision to continue it or make a change to your policy.
WARNING: If you switch funds, you may lose or may not be able to get equivalent insurance
Comparing super funds
The Australian Tax Office YourSuper comparison tool provides performance data for the last seven years for around eighty superannuation funds. This is a great place to start your research on what super you have, and whether you should consider making a move.
Rule of thumb; if you have a low super balance is you want a low-cost fund with solid performance.
How to move your super
MoneySmart has a great guide on how to go about moving or consolidating your super
- Go to My.gov.au and login or create your account
- Select the ‘Super’ option and then “Manage”
- Choose to ‘Transfer super’ if you have more than one super account
- You can also contact the new fund directly to transfer the funds.
Or speak to a financial advisor about how your super is managed.
A final thought…
Some people might also like to consider whether their money is invested in ethical, sustainable and governance principles.
Photo by Julius Yls on Unsplash