Money
6 checks to make on your next super statement
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Most superannuation funds mail out their statements to members during September and October. If you’re still accumulating super, there are 6 checks worth doing to ensure everything is on track for the retirement you want.
By Alex Brooks
Don’t set and forget
Let’s face it, most of us find superannuation as interesting as watching paint dry.
We pay minimal attention to our super until we realise how powerful our superannuation savings are to unlock the retirement we want.
Actively managing our super becomes more important as we get closer to thinking through and projecting the type of retirement we want.
Here are 6 key questions your next super statement can help answer:
1. How much should your superannuation grow?
Most funds have mailed their statements for the last financial year, with the average fund returning more than 9%, according to superguide.
Your final super balance can potentially be combined with the age pension after the age of 67 to provide sufficient income for a comfortable retirement.
The most prominent figure on your super statement should be your total balance as of June 2023.
With this information, you can use online tools and calculators to project what your balance might be by the time you retire.
Citro has a free guide to online retirement calculators.
Some super funds provide retirement projections on their statements or they have membership websites that let you login and make some projections.
You can always phone your super fund to find out what options are available to simplify the process and help you understand whether you need to make adjustments to your super to get the lifestyle you want later in life.
If you’re unclear on how old you need to be to access your superannuation (there are strict rules about ‘preservation ages’ and taxation rules), then simply call your fund and ask someone to explain it to you.
2. What is your super invested in?
Your superannuation is a tax-sheltered way to accumulate money before retiring and access an income after retirement. It is your money, similar to cash in the bank or a share portfolio.
All funds offer some type of ‘investment choice'. If you haven’t made an active investment choice, your fund will put you in a default choice, usually a balanced fund.
Your super statement will reveal the investments your money makes, or - more likely - a combination of options. Some of these might be cash, property, international shares or Australian shares. Increasingly, more super funds are offering ethical and sustainable investment choices, too.
Understanding your risk and ethical preferences is vital to making sure your superannuation investments are aligned to your needs and wishes.
Some super funds will have free advisors who can help you decide on the right investment mix for you.
3. Is your employer meeting superannuation obligations?
Your statement outlines transactions for 2022-23, allowing you to verify whether your employer contributed the mandatory 10.5% of your salary, which increased to 11% on July 1 of this year.
Some employers delay or neglect superannuation payments, which isn’t allowed. Vigilance is the only way to prevent such discrepancies.
People like me have discovered the hard way that employers didn’t pay super correctly - or ‘accidentally’ put you in their default fund instead of the fund of your choice.
This not only costs you money, but takes hours of complicated calculations and checks to ensure everything is rectified.
It’s easier to check your statement each year and ensure everything is as it should be.
4. Are fees eroding your retirement savings?
Review the fees disclosed on your statement and compare them against industry benchmarks and other funds using the Australian Tax Office’s YourSuper tool.
Investment platform Stockspot suggests seeking funds charging less than 1% in fees, as it can potentially leave you $245,000 better off in retirement compared to a similar fund charging 1% more.
You can get Stockspot’s Fat Cats Fund report (you’ll have to opt in with your email) to find out more.
APRA - a regulator - also publishes heatmaps and annual performance tests to make sure MySuper default funds operate in the public interest.
And while fees and charges can eat away at your super, the annual performance of your super fund is the real key to getting good returns for retirement.
Superguide publishes Chant West’s ranking of superannuation funds and Rainmaker publish a league table on Selecting Super.
(Performance tables like these don’t always compare apples with apples - as long as your super fund is ethical, transparent and not charging extortionate fees, the performance over a 10-year period will matter more than a year-on-year performance rankings.)
5. Are you overspending on insurance?
Underinsurance is just as much of a problem as over insurance.
Most super funds used to charge for insurance by default. Read more about insurance and super on Moneysmart.
Older people tend to be over-insured and pay for unnecessary coverage.
As we age, our debts decrease, assets rise, and children grow up, reducing the need for life insurance. Premiums also increase with age, potentially resulting in excessive expenses for redundant coverage.
Only you can decide the right level of insurance for you.
6. Estate planning and beneficiaries
Superannuation assets exist outside of a will.
This means that unless you establish a binding death benefit nomination outlining how you want to distribute your superannuation assets after you die, the trustee of the super fund, often a stranger, makes these decisions.
Ensure that your nominated beneficiaries are binding and accurately reflect your preferences, preventing potential family disputes over superannuation assets.
It’s usually worth getting legal advice on this. You can read more on advance planning.
Also, if in doubt, call your super fund and ask them to explain who your nominated beneficiaries are and what would happen if you died unexpectedly.
Advice given in this article is general in nature and does not take into account your personal circumstances. It is not intended to influence readers' decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.