Switch to super savings

With super caught up in the banking inquiry, the time’s right to look at your own fund, writes Sophie Elsworth

SUPERANNUATION funds have come under fire in week one of the banking royal commission and there’s more pain to come in week two.

For frustrated members who have been outraged with the tales of rorts, blatant gouging and the collection of lucrative commissions, it may be time to switch. But before you jump, experts warn there are a few things to consider.

1. BE ENGAGED

The superannuation industry is worth a whopping $2.6 billion, and with dozens of funds available there’s plenty of choice for members.

The Association of Superannuation Funds of Australia’s chief executive officer, Martin Fahy, said the first step was to check the status of your existing fund, including fees, charges and balance, before taking any action.

“People need to be more engaged with their super and if you’ve got concerns with your super, get out your statements and fund letters,’’ he said.

Also pay attention to what investment option you are in because this will significantly impact your returns.

2. FEES AND CHARGES

Dr Fahy suggests members ask friends and family what fees and charges they pay so you can compare with your own.

“Compare your fees and then ring your fund,’’ he said. “If you feel you are not getting a good deal then don’t be afraid to move.”

He said fees could range up to 3 per cent but ideally customers should be paying around 1 to 2 per cent.

“For most consumers, fees will range from 0.5 per cent to 1.5 per cent dependent on product features such as the nature of underlying investments,’’ Dr Fahy said. “On average, the percentage-based fee for consumers in MySuper products is 0.81 per cent per annum.”

There are many different fees that apply, including administration and investment fees and insurance costs, so if you’re confused, call your fund.

3. PERFORMANCE

One of the nation’s largest super funds, Hostplus, has more than 1.1 million members and manages $34 billion. The fund’s group executive of retirement solutions and advice, Paul Watson, said it was important to also weigh up how your fund had performed in recent years.

“General considerations include the long-term net performance of an investment option,’’ he said. “Staying with one top-performing fund over the long-term could mean the difference in tens of thousands of dollars.”

The fund recently returned the best of all “My Super” balanced investment options for the last financial year, at 12.5 per cent. But industry experts say 10-year performance is often a better indicator of how a fund has really fared.

4. SWITCHING/ CONSOLIDATING

There are plenty of online sites, including Canstar, Chant West, Super Ratings, Morningstar and RateCity, to compare funds.

Mr Watson said it can be a relatively smooth process. “Setting up a new super account and consolidating your other accounts can be done over a cup of coffee and could be the most valuable 10 minutes of your life,’’ he said.