Superannuation is one of those topics that gets filed away in a drawer to think about later, but that shouldn’t be the case. Many of us will be drawing on our super for 30 or 40 years, so if it's currently being eroded by heavy fees or improper investments, it's time to take action.
With changes to superannuation or the aged pension pitched at a government level every few years, it’s imperative to make sure your super fund is doing the heavy lifting now to ensure you have enough to get through your retirement years.
It may be worth putting your super fund to the test and seeing how it measures up on the following fronts.
Super funds need to charge fees to cover the management of your savings and the cost of investing, but how much funds charge for those duties tends to vary significantly. The best way to determine whether you're paying too much in fees is by comparing your fund with other similar funds. ASIC's superannuation calculator can tell you how much of a difference a slight reduction in fees could make to your overall super balance.
Investment risk tolerance
If you have an industry or retail super fund (as opposed to a self-managed super fund), your fund will invest your money on your behalf. It’s up to you to determine how much risk you want your fund to take. The default option is the balanced fund, which shares the risk between aggressive (higher risk, potential for higher return) and conservative investments. Balanced options are not right for everyone and if you want to take a little more or a little less risk, you can change your allocation with your super fund.
Many super funds offer basic life insurance options and may charge less than direct channels or advisers given the bulk discounts they are sometimes eligible for. You may pay a higher premium if you want to be covered for other scenarios, such as a loss of income or disability. Have a conversation with loved ones about the best option for you.
We are repeatedly warned past performance is no indicator of future performance, so beware of any fund that makes performance promises. If you do want to gauge how your fund has tracked historically against other funds, you can compare here.
Customer service is rarely a metric used to compare super funds, but if you’re getting close to retirement, it’s nice to be able to call your fund and know your questions will be answered. Some funds have dedicated advisers, others have available consultants, others have very few options for customers with queries. Worth investigating sooner rather than later.
This article is general in nature and should not be substituted for tailored financial advice.