eq-2014-12

From ASIC,
the financial
regulator
Get to know your super
By Miles Larbey, Senior Executive Leader, ASIC’s MoneySmart team
Getting to know their super is something many Australians
put off because they may have more pressing financial issues.
But taking a few small steps now can make a real difference.
You’ll be able to watch your super savings grow and improve
your financial future.
LOG IN TO YOUR SUPER ACCOUNT
In a recent poll on ASIC’s MoneySmart website, around 6 in 10
people said they know how much they have in super. Around
4 in 10 said they either didn’t know, or only ‘sort of’ know how
much super they have. This suggests many Australians could
benefit from finding out more about their super.
Most super funds have a lot of information online. If you’ve
never checked out your fund’s website then this is the first
thing you should do.
You may need to create a username and password. Once
you’ve done this, log in and find out about:
• What investment options you can choose
• What fees you’ll pay
• Death and disability benefits and insurance premiums
• Other fund features and services.
You may also be able to download statements about your
account and see your balance.
CONSIDER YOUR INVESTMENT OPTIONS
If you’ve never made an active choice about how your money
is invested, your money will be put into a fund that offers a
MySuper investment option. This is a simple default option.
However, most funds offer a range of investment choices.
When deciding between investment options, consider:
• Your age
• How comfortable you are with investment risk
• How long before you are able to access your funds
For example, if you’re unlikely to be accessing your super
for at least five years, focus on growing your total benefit.
Alternatively, if you’re retiring and intend to withdraw all your
super in less than five years, you may want to know exactly
how much you’ll have – and not risk losing any of it in the
meantime. A lower risk, lower return strategy will help preserve
the value of your savings.
The fund’s product disclosure statement (PDS) will give you
more information about your investment options.
‘LIFE CYCLE’ INVESTMENT OPTION
Some funds offer a ready-made investment strategy, usually
based on age. If you choose this strategy, your fund will select
an appropriate investment mix based on your age at the time.
Then, at pre-determined intervals the fund will automatically
switch your savings into a more defensive mix.
Typically, over the course of your working life, your investment
strategy progressively changes from growing to preserving
your balance.
FIND OUT WHAT FEES YOU’RE PAYING
Super funds charge different fees for managing your account,
contributions, insurance and more. As a general rule, the less
you pay in fees the more your super will grow.
You can find out what fees you’re being charged in your annual
statement, on the fund’s website or in the PDS. Fees can be
either a dollar amount or a percentage.
MySuper accounts generally have lower fees and can only
charge certain types of fees. If you’re looking for a low fee
option, talk to your super fund about whether a MySuper
account is right for you.
To find out if your super fund is charging you high or low
fees, compare it to other similar funds. MoneySmart has a
superannuation calculator to help you do this.
DO YOU NEED INSURANCE
Super funds typically offer death cover (also known as life
insurance or term life cover), total and permanent disability
cover and income protection cover.
Being insured through super is generally an easy option – and
cost-effective because premiums are paid from your pre-tax
income. Insurance premiums are usually deducted from your
super account, which reduces your super, unless your employer
pays for your cover.
Think about whether to take up or keep the insurance
protection your fund provides, or whether you want more
cover. If your situation is complex, consider getting professional
financial advice.
SHOULD YOU CONSOLIDATE YOUR ACCOUNTS
If you have money in more than one fund you may decide
to consolidate it into a single fund. This will make it easier
to manage your super and you will only pay one set of fees.
Before you decide which fund to use, it’s a good idea to see
what each fund offers.
Consolidating accounts is a lot easier than it used to be
with the free SuperSeeker tool available via the ATO’s online
services at ato.gov.au. In the process, you may find you have
some ‘lost super’.
It can be hard to find the motivation to engage with your
super because retirement may seem a long way away, but if
you take a few small steps to understand your situation now,
it can make a real difference in the long run.
ASIC’s MoneySmart website at moneysmart.gov.au, has more information
and calculators to help you make the most of your super.
EQUITY December 2014 Page 18