Should I review my super fund? YES! OK then…what do I check?

Earlier this year we looked at a Club Plus Super survey of 18-36 year old’s and their feelings towards superannuation. The survey found that although young Australian’s DO care about their super funds – they are not particularly engaged clients of their super fund.
This is understandable, considering currently, the preservation age to access super is 60 – and likely to increase in future.

So – as a younger Australian – even if you are not taking notice of your super fund – what should you be looking at when you get your next superannuation statement?

Fees

Every super fund charges fees.
The main fees that all super funds have are an administration fee (charged by the fund), and an investment fee (charged by the investment managers).

In my experience, if you are paying more than 0.90% pa in total fees, you could probably do with reviewing your current account.

Asset Allocation

Another important aspect of your super account is where the money is invested. Super funds will diversify across defensive assets; such as bank accounts, term deposits, bonds, fixed interest, and growth assets; such as property, shares or alternative asset classes.

Most superannuation accounts have their default investment option as a balanced fund. A balanced fund will split their investments 30-50% in defensive assets and 50-70% in growth assets.

Most people feel comfortable with this, however bearing in mind that growth assets have a higher growth potential over the long-term – it can be beneficial to look at increasing the allocation to growth assets if you have the appetite for increased volatility of returns.

Insurance

Worryingly, 20% of people surveyed by Club Plus Super answered ‘Wait…what…there’s insurance in super?’ when asked about whether they had insurance in place via super.

Super funds can hold Life cover, Total and Permanent Disablement cover and Income Protection insurance cover and be charging 100’s of dollars in premiums each year – these are usually default levels & not tailored to individual needs.

Discussing what insurance you want and need is a good way to ensure you have a suitable protection plan in place.

Contributions

Are there contributions going in? If not, you might have funds in multiple super accounts. Several super accounts probably means you are paying more in fees than you should be.

Have any additional questions? Please feel free to contact us for a complimentary appointment.