Super savers risk big miss

Wrong option costly, report warns

AUSTRALIANS could be doing themselves of more than $50,000 in retirement savings by failing to pay attention to their superannuation, new statistics have shown.

The research by Rice Warner, in conjunction with the Australian Institute of Superannuation Trustees, found collectively workers could be short-changing themselves $52.5 billion in the next decade.

The report revealed for a single person on an annual income of $100,000, they would end up with $51,000 less over a working lifetime if they did not have their money in a fund’s default MySuper option.

The difference in returns is based on a 25-year-old who retires at age 67.

The member could end up with $503,000 at retirement versus $452,000 if they opted for a different investment option outside of MySuper.

MySuper is a low-cost and simple option employees are automatically defaulted into unless they choose otherwise.

Alternatives including opting for money to be invested in cash or high growth options, where money is invested more heavily in riskier assets.

AIST’s chief executive officer Eva Scheerlinck urged super fund members to check the fees they are paying on their accounts.

“We want people to realise the money in super is their money,” she said.

“They should take half an hour every couple of years to work out if it’s right for them.”

She suggests checking member admin fees are no more than $2 per week and beware of asset-based fees — some funds do not charge these.

On top of this members also check insurance cover costs.

Bank-owned super funds have copped a battering in the financial services Royal Commission for unfairly gouging members excessive fees and delivering poor returns.

AustralianSuper group executive Paul Schroder said MySuper provided “people with a simple, cost effective option for their retirement savings”.

“But not all MySuper options are the same and a poor choice could cost you dearly in the long run.”

He urges members to compare the net benefit — the investment return after fees and taxes are taken into account.

Latest Australian Prudential and Regulation Authority statistics show the amount of assets in industry super funds has overtaken retail funds for the first time.