Money Magazine Australia - - COVER STORY - Su­san Hely

What is it?

Carrott is a sav­ings app on your phone that al­lows you to sweep your vir­tual spare change from your ev­ery­day trans­ac­tions into your su­per fund.

How does it work?

You download the free Carrott app on your iPhone or An­droid de­vice. When you buy a cof­fee for $3.70, the 30¢ is “saved up” and once it reaches $5 it is swept into the Carrott ac­count. Ev­ery month Carrott sweeps the bal­ance in your ac­count into your su­per fund.

What are the pros?

It is a pain­less, au­to­mated way to con­trib­ute more to su­per­an­nu­a­tion. It can add up over time. For ex­am­ple, $10 a week means you are con­tribut­ing an ex­tra $520 a year (mi­nus the fees) into su­per­an­nu­a­tion (see Fact File). You are also keep­ing in touch with your su­per. Be­ing aware of how much you have in your re­tire­ment sav­ings is a good thing, as you can no­tice any em­ployer con­tri­bu­tion short­falls and chase them up. A re­cent sur­vey com­mis­sioned by ANZ found that 15% of Aus­tralians have no idea how much they have in their su­per.

What are the cons?

Not all su­per funds have joined so you may not be able to con­trib­ute to your fund, although more funds are sign­ing up. Carrott checks your fund with you to see if it al­lows con­tri­bu­tions through the app.

The cost is high com­pared with set­ting up your own top-up with your su­per fund – ei­ther be­fore tax with your em­ployer (salary sac­ri­fic­ing) or after you have paid tax from your bank ac­count. You can do this at no cost.

What are the fees in­volved?

You pay 3.98% plus 30¢ for each trans­ac­tion, plus $1 a month for ac­count main­te­nance. For ex­am­ple, if you con­trib­ute $20 a month in two $10 trans­ac­tions, to­talling $240 a year, your to­tal fees will be $28.75. This works out around 12% of your con­tri­bu­tion, which is ex­pen­sive.

In­stead of go­ing through Carrott, why not set up an au­to­matic debit each month to your su­per fund di­rectly via your bank ac­count or pre-tax salary? You can do that eas­ily and pay no fees.

How has it per­formed?

It is still early days, hav­ing been launched in Septem­ber this year.

How safe is it?

The Carrott app holds the money for a month be­fore it sweeps it into your su­per­an­nu­a­tion fund. Un­der ASIC reg­u­la­tions, Carrott is re­quired to hold a min­i­mum of $5 a month with a max­i­mum of $1000 a month. Chris­tian Raftery, chief ex­ec­u­tive of Carrott, says users typ­i­cally have around $ 40 to $60 each month. He says the per­sonal de­tails are kept in a de­cen­tralised sys­tem. A data ag­gre­ga­tor (En­vest­net Yodlee) stores all the bank in­for­ma­tion. Carrott stores your su­per fund mem­ber­ship num­ber.

How do I get started?

Pro­vid­ing your su­per fund ac­cepts con­tri­bu­tions, you sim­ply sign up to Carrott at car­ au. You pro­vide your su­per fund de­tails, email ad­dress and trans­ac­tion bank­ing ac­count num­ber.

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