Review my superannuation
Super plays an integral part in establishing financial security in retirement.
At present, 10.5% of your salary is contributed to superannuation & for many Australians (outside your home) this will become your most valuable asset,
so it is important that you understand the basics, what you are invested in, associated fees, the mechanics of your particular super fund, and how this will support you to retire on your terms.
There are 4 main reasons why should you review your superannuation fund?
1. Fees
Have you ever thought about how superannuation fund fees will effect your retirement savings over your lifetime?
The difference between a low fee & a high fee super fund can be the difference between retiring on your terms & relying on the age pension.
When it comes to looking at the “cheap” superannuation funds, don’t forget to “compare the pair” & look at all the fees.
Our Newcastle financial advisors recommend you do not just stop at the admin or member fees when completing your research, have a look at the investment management (MERs) fees, as some of the “cheap” funds are collecting a large proportion of their fees through “management fees”.
2. Performance / Investment Options
Just like low fees, having a strong performing super fund is critical to achieving a self-funded retirement.
Unfortunately, there is a wide range in the performance of superannuation funds.
Therefore, relying on the super fund that your employer set you up with is in all likelihood going to leave you short changed at retirement.
Furthermore, looking for a super fund that provides you with a choice or a wide range of different investments is ideal, even if there is not a need for these investments today, as your super fund grows your appreciate for risk changes with your financial & retirement goals. Having a wide variety & range of investments provides you with choice & freedom to construct your portfolio to meet your needs (without having to change super funds & potentially pay capital gains tax).
3. Tax
This is critically important & in our experience, can be most costly.
Some super funds offer a pooled tax system, that is where they pool all the franking credits together and spread it across the members, whereas other super funds are individually taxed super funds, where if you have taken a risk to invest in shares, you benefit from your franking credits.
In addition, many super funds do not allow the ability to transfer between super & pension accounts (inspecie transfer)
If your super fund does not have this facility or option, our Newcastle financial advisers would not even consider it.
Inspecie transfer service helps you avoid capital gains tax when you go to retire.
When you move your superannuation from accumulation phase (where you are receiving contributions) to pension phase (where you draw an income from your super in retirement).
It helps you avoid crystallising capital gains which can potentially save you a huge amount of money in the long run.
4. Insurance
When researching super funds, we want to ensure that through your super you can take out personal insurance, including Life cover, TPD cover & income protection cover.
In addition, we don’t just want any type of income protection cover, we want to ensure it cover you to at least age 65.
There are other little nuances that we focus on when advising our clients, including have TPD Own occupation & having bells & whistles of an income protection policy attached to your insurance within your super fund.
However, in saying that, there is now an ability to obtain the most appropriate super fund & also obtain the most appropriate insurance policy for your particular circumstances. As these days you do not need to have the insurance that your super fund offers (there are ways around this).
The Government has made superannuation very complex, so it is recommended you seek professional advice from a financial advisor, as you have only one opportunity to retire and you want to avoid the mistakes that may impact your retirement plans.
When you review your superannuation accounts, ensure they meet these four requirements, if they don’t, began your research to find a super fund that does & ensure it meets your needs - just like you would when buying a car.
Alternatively, if this sounds like too much, contact our Newcastle & Lake Macquarie Financial Planning Advisors who can support you & do all the heavy lifting for you.
Speak to a Financial Advisor
We can review every superannuation fund in Australia and we can help you understand what your money is doing for you
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