ASIC tips for managing your super
26 May 2021
While retirement may be a long way off for some, it’s never too early to start thinking about superannuation.
Your super is your money. For many, it is the biggest asset after your home. So it’s important to stay on top of your super and choose a fund that best meets your needs.
ASIC’s Victorian Regional Commissioner and Chief Operating Officer Warren Day recently joined Raf Epstein, host of ABC Melbourne Drive, for tips on how to manage your super.
Types of super funds
‘Most super funds fall into one of the following categories: retail, industry, public sector or corporate. They have different features and requirements on who can join’, Warren said.
A self-managed super fund (SMSF) is a private super fund that you manage yourself. SMSFs are different to industry and retail super funds.
‘Retail funds are usually run by banks or investment companies. Anyone can join.The company that owns the fund aims to keep some profit.
‘While generally anyone can join the bigger industry funds, smaller funds may only be open to people working in a certain industry, for example, health. They are profit-for-member funds, which means profits are put back into the fund.
‘Both retail and industry funds also usually offer MySuper accounts. ‘MySuper’ is a ‘default’ super account in the super fund, which typically offers lower fees and simpler features so you don’t pay for services you don’t need.
‘Public sector funds are for government employees while a corporate fund is arranged by an employer for their employees.’
Choosing a super fund
‘Most people can choose which super fund they'd like their super contributions paid into. You can go with your employer's fund or choose your own.
‘When choosing a super fund, weigh up the fund’s performance and the fees you'll pay against other factors such as risk, investment returns, services and insurance’, Warren said.
- Performance - consider how well the fund has performed over the past 5 to 10 years and be sure to compare like with like, For example, only compare a balanced option with another balanced option, and try to use the same time period.
- Fees – all super funds charge fees as either a dollar amount or a percentage, or both. All other things being equal, fhe lower the fees, the better. Fees are usually deducted monthly and also after an action such as switching investments. Check what other fees may apply for things like insurance or financial advice.
- Investment options (for example, growth, balanced, conservative, cash, ethical, MySuper) - make sure the options suit your investment needs and risk appetite.
- Insurance is generally offered as standard and understanding your insurance (both coverage and cost) might be important, as this can vary a lot between funds.
- Some funds may offer services like financial advice, or splitting your super in certain circumstances, which can attract special fees.
‘If you don't (or can't) choose your own super fund, your employer will generally put your super into a MySuper account,’
Warren said you can always change funds after you start a job.
He also encouraged listeners who may have more than one super fund to consider consolidating your super and moving all your super into one account.
‘It makes your super easier to manage and saves on fees. You can transfer your super for free in a few easy steps. See Moneysmart for more information.’
If you’ve changed jobs or moved addresses, there could be ‘lost super’ held by your super fund or by the Australian Taxation Office (ATO). You can find your lost super online through the ATO.
‘Super can be complex. If needed, seek professional advice from a retirement or financial planner to help identify financial goals and put strategies in place to achieve your goals’, Warren said.
Listen out over the next few weeks for more information on better understanding your superannuation and superannuation funds.