Money Magazine Australia

Choose the best pension

- KIRBY RAPPELL

Kirby is executive director of superannua­tion research house SuperRatin­gs, which is owned by Lonsec Holdings, a privately owned financial services research and investment group. superratin­gs.com.au

Wilfrid’s story is an amazing one to read and everyone at SuperRatin­gs hopes he can enjoy a relaxing retirement and lots of dancing.

The past year has seen a lot of discussion about super and many Australian­s are thinking about what is right for them.

For people starting an account-based pension in 2017, the average starting balance was around $280,000, so it is important to note that Wilfrid has a much healthier account balance than most. Despite this, the fear of running out of money remains a challenge for many people and is not always an easy one to resolve.

Fees for pension products range widely across the market but Wilfrid’s current product seems to be charging a competitiv­e amount on administra­tion and product fees. The current level of drawdown on the account was also less than investment earnings for the year, so it’s pleasing to see that Wilfrid’s nest egg grew slightly.

We are seeing more volatility in markets in recent months and it may be beneficial for people to be thinking about the level of risk they are willing and able to accept. Wilfrid currently has a mix of around 60% growth assets, and it is worthwhile periodical­ly checking that this remains appropriat­e. If you feel your current investment mix is not appropriat­e, we suggest speaking to your fund or an adviser to help you with your decision to ensure your portfolio continues to meet your needs.

The flexibilit­y of accountbas­ed pensions also varies, such as the frequency of payment dates available and beneficiar­y options. This is something to keep in mind when considerin­g whether or not to change providers.

Overall, for Wilfrid and many other people, giving your current arrangemen­t a check-up from time to time is appropriat­e but it is good to see he is in a wholesale product that is on sale. This is always something to be mindful of.

This year SuperRatin­gs’ Pension Fund of the Year is QSuper. The top five according to our ratings for 2019 are (in alphabetic­al order): Australian­Super, HESTA, QSuper, Sunsuper and VicSuper.

SuperRatin­gs believes that the key features to look for when choosing an accountbas­ed pension are strong longrun investment performanc­e, competitiv­e fees, account flexibilit­y and access to advice. These features are often not that easy to understand or compare, so it requires research and high-quality advice from an expert.

Overall, everyone should take their time to check their super and it is great to see Wilfrid is doing this. When we run the product through our tools, it seems competitiv­e but talking to an adviser about his risk tolerance and portfolio risk could help address his concerns here.

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