Super deserves our full attention
SUPERANNUATION is a vital asset, so take an interest, understand it and manage it.
CHECK CONTRIBUTIONS Employee contributions make up the main portion of super accounts so ensure the right amount is being paid. Pay slips usually detail contributions but, if not, check your super statement. If anything seems off, ask your employer then talk to the Tax Office.
READ STATEMENTS Member statements are sent out each year and detail the start and end balance, contributions paid, any insurance or management costs, tax paid and the value of investment returns.
The first page usually summarises account balance and performance compared to last period. The units in each option are like shares in a company.
The second page details your investment options. Choosing an appropriate portfolio is crucial, so check this.
Insurance is also set out here. It’s usually a default inclusion but is obsolete if you’re covered by another policy.
There will be deductions for management and administration fees, which shouldn’t exceed 1.5 per cent of a balance under $100k or 1 per cent of a balance over $100k.
CHOOSE A SUITABLE INVESTMENT OPTION A few years ago we had a friend close to retirement who was beside herself due to losses on her fund. She didn’t know her money was in the high-growth option, solely invested in shares, and had been hit by a crash.
Funds offer a range of options described by terms like “growth”, “balanced”, “conservative” and “cash”.
These have various proportions of shares, property, fixed interest and cash investments.
Dig into each option in light of your age, comfort with investment risk, how long you have until retirement and how much you need to fund that retirement. Young people can afford a higher risk portfolio, while those closer to retirement age should opt for a more conservative one.
If one investment option doesn’t suit, consider splitting your super across a few. For example, 50 per cent conservative, 25 per cent growth and 25 per cent balanced. These modifications are usually free and easy to make.
Proactively managing your super investment can have a big impact on the lump sum when it is time to cash out. But get independent advice to find the right mix for you. Most super funds have financial planners who can help.
UPDATE DETAILS If you change jobs or move house, let your super fund know. When you call the bank to update your details, call the super fund too. Visit ato.gov.au to make sure you don’t have unclaimed super.