Checklist for healthy super
Xavier O’Halloran, director of Super Consumers Australia, an advocacy group, suggests you check the following to ensure your super is well placed to make the most of the year ahead:
Make the effort now
“It’s important you make good decisions now because of the impact of compound interest. It’ll have a big influence over the type of retirement you’ll have. Your money can grow quite strongly if it’s invested in a high-performing super fund. Also, no one wants to be ripped off or charged excessive fees.”
Get rid of multiple accounts
“Set up a myGov account if you don’t have one, log in and see all the super accounts you have. The average person has two, so having a good idea of what you’ve got is the first thing.
“Some low-balance, inactive accounts are being auto-consolidated by the ATO. If you’ve got less than $6000 and the account hasn’t been active for 18 months, there will be an auto-consolidation process go on.”
From July 1 your super will follow you from job to job and the new employer will pay your SG into your existing accounts. O’Halloran says there are currently six million duplicate accounts.
“If you maintain duplicate accounts, that’s a huge loss in duplicate fees and duplicate insurance, some of which you may not be able to claim on. You can only claim on one income protection policy at a time.”
Aim for the best
From July 1 the government is setting up a tool to make it a lot easier to compare the performance and fees of MySuper default products, which people land up in if they do not make an active investment choice. They will all be there and you will be able to compare them quite easily.
O’Halloran says MySuper dashboards also provide vital information. “A lot of funds list their 10-year performance, which is a pretty good guide to go by. Also, look at the fees. The average fee in the MySuper sector is about 1%. It’s a good rule of thumb. If you can find something under 1%, you’re on the right track.”
Insurance can be tricky
“Ask your fund what your insurance will cover, its benefits and what the costs are. There are big differences between super funds. ASIC found, in a report released late last year, there wasn’t too much of a link between costs and quality.”
Income protection and total and permanent disability policies can be restrictive and difficult to claim on.
People need to keep their beneficiaries current. “If you pass away, your super gets treated differently to the rest of your estate. The fund trustee decides how your benefits are distributed, but you can have a say over that by keeping your beneficiary nominations up to date.”