Getting Your Super Sorted - The Most Important Financial Decision Apart From Buying a House!

Superannuation, or super, is a way of saving money for your retirement, what we call a vehicle to help you get closer towards your retirement goals. It is made up of contributions from your employer, money you put in yourself, and any investment returns. The more you save, the more money you will have for your retirement.

But how do you know if your super fund is performing well and charging reasonable fees? And how do you compare different super funds to find the best one for you?

Below, we will explain the basics of superannuation, the factors to consider when choosing a super fund, and the tools you can use to compare super funds.

What is superannuation?

Superannuation is a compulsory system in Australia that requires employers to pay a percentage of your salary into a super fund for you. This is called the super guarantee, and it is currently 11% of your ordinary time earnings. You can also make voluntary contributions to your super fund, either from your pre-tax or after-tax income.

Your super fund invests your money in various assets, such as shares, property, bonds, and cash. The aim is to grow your balance over time and provide you with income when you retire. You can generally access your super when you reach your preservation age, which is between 55 and 60 depending on when you were born, and meet a condition of release, such as retiring or turning 65.

What to look for in a super fund?

When you start a new job, your employer will give you a standard choice form that sets out your options for choosing a super fund. You can either go with your existing fund, your employer’s fund, or a different fund. You can also change your super fund at any time, but you may have to pay exit fees or lose insurance cover.

There are many factors to consider when choosing a super fund, such as:

• Performance: How well has the fund performed over the long term, after fees and taxes? You can compare the net returns of different funds over at least five years, and look for consistent results. Remember that past performance is not a reliable indicator of future performance, and that higher returns usually come with higher risks.

• Fees: How much does the fund charge for managing your money and providing services? Fees can have a big impact on your final balance, so look for a fund that charges low or reasonable fees. Fees can be either a dollar amount or a percentage, or both, and they are usually deducted monthly and also after an action such as switching investments.

• Insurance: What type of insurance cover does the fund offer, and how much does it cost? Most super funds provide life, total and permanent disability, and income protection insurance for their members. You can compare the premium rates, the amount of cover, and any exclusions or definitions that might affect you. You can also tailor your insurance to suit your needs, or opt out if you have enough cover elsewhere.

• Investment options: What range of investment options does the fund offer, and how do they suit your risk appetite and time horizon? Most super funds let you choose from a number of options, such as growth, balanced, conservative, cash, ethical, or MySuper. Some funds also let you choose the weighting of different asset types or direct investments. You can switch your investment option at any time, but you may have to pay fees or taxes.

• Services: What other services does the fund offer, and how do they benefit you? Some super funds offer financial advice, online tools, education, member discounts, or other features. You can compare the quality and cost of these services, and decide if they are worth paying for.

How to compare super funds?

There are several ways to compare super funds, such as:

• The ATO’s YourSuper comparison tool: This is an online tool that displays a table of MySuper products ranked by fees and net returns. MySuper products are simple and low-cost super funds that meet certain standards. You can select and compare up to four MySuper products at a time, and link to the fund’s website for more information. You can also access a personalised version of the tool through your myGov account, which shows your current super accounts alongside other MySuper products.

• The product disclosure statement (PDS): This is a document that provides detailed information about a super fund’s features, fees, risks, and benefits. You can obtain the PDS from the fund’s website or by contacting them directly. You can compare the PDS of different funds to understand their differences and similarities.

• Super comparison websites: These are websites offered by private companies that allow you to compare various aspects of super funds, such as performance, fees, insurance, investment options, and services. Some of these websites are free, while others charge a fee for more detailed information. Some examples of super comparison websites are Canstar, Chant West, Morningstar, RateCity, SelectingSuper, and SuperRatings. Note that these websites are businesses and may make money through promoted links. They may not cover all your options, and they may use different methods and criteria to rate and rank funds.

• Alternatively, if you have read the above, and have determined that it may be difficult to sift through all the different superannuation funds, conflicting information and you cannot find a fund that is a correct fit for your family and yourself… You should look at discussing your situation with a Financial Adviser, whom will objectively look at your goals and truly understand your situation, whilst offering a solution with your best interest at heart. (They legally need to look after your best interest’s to remain compliant.) You can look up your closest Financial Adviser and just give them a call for normally a free 15-30 minute consult to see whether you are the correct fit. Always look at talking to 2-3 different advisers before deciding who is the correct adviser to go with, as choosing an adviser is almost as important as choosing your superannuation fund.

Superannuation is an important part of your financial future, so it pays to choose a super fund that suits your needs and goals. By comparing different super funds based on their performance, fees, insurance, investment options, and services, you can find the best one for you. You can use various tools and sources of information to help you compare super funds, such as the ATO’s YourSuper comparison tool, the product disclosure statement, and super comparison websites. Remember to review your super fund regularly and make changes if necessary.