How to Review Your Superannuation Fund

An article on how to review your own superannuation fund.

Part of our role as a financial adviser is reviewing your superannuation, this would generally include things like looking at the functionality of the superannuation fund, how much fees you pay, what you are invested in and underlying insurances of your fund.

What not to do!

We see a lot of horror scenarios where prospects have come to see us, they have a superannuation fund that their employer has set up or a friend has told them to sign up for. Beyond this, they don’t see how it compares which leads to poor performance, high fees or excessive insurance premiums.

Horror Story Alert!

We did some complimentary research for a prospect, and we found that they were charged $25,000 a year in insurance premiums. Their performance was also very low due to being invested in cash.

What we did! We switched their superannuation platform and invested them in line with their cashflow requirements leading to retirement. We also adjusted their insurance premiums to what they need for the next few years which reduced their premiums to $4,000 pa.

Find Out What Super Fund You Are In

Find what type of fund you are in, this will help with comparing if it is cheap or expensive. You may also decide that you are looking for a higher-functioning platform or would rather have a simple platform.

There are four main types of superannuation funds in Australia. These being:

  • Industry Super Fund – Very cost-effective administration, limited investment availability often having around 15 investment options and minimal transparency over investments.
  • Master Trust Platforms – A bit more expensive for administration generally than an Industry Super Fund but you gain more investment availability of around 150+ Managed Funds and better reporting ability.
  • Wrap Platforms – Generally for higher balances but provides around 1,900 managed funds and the ability to purchase shares. These accounts provide significant reporting and transparency across your retirement assets.
  • Self-Managed Super Funds (SMSFs) – These are often the most expensive funds to run, but they do provide the most flexibility with investments as you are able to buy into residential and commercial properties.

Reviewing your Super Fund Fees

To determine the fees of your fund you will need to look at the Product Disclosure Statement and associated Investment Guides. These disclosure documents are required to be on the super fund’s website so start there! The following are the types of fees that you may be charged:

  • Account Keeping Fee or Membership Fee – This is generally a dollar-based fee and is part of the fund’s administration fees.
  • Administration Fee – This is commonly a percentage-based fee calculated on the total balance of your fund.
  • Expense Recovery Fee – This is a fee that helps the super fund recover expenses incurred on your account.
  • Investment Fees – These are generally a percentage-based fee, they are charged per investment or managed fund you are in. Within this, you can include Managed Funds, Indirect Cost Ratios and Transaction Fees.
  • Performance Fees – These are charged for some but not all investments and are either a percentage-based fee or worked out on a metric of outperformance.

Reviewing your Super Fund Performance

Your super fund performance can be easy to find either on your member portal or via the fund’s website. Although comparing your super fund performance can be the hard part. This is because super funds release their performance in different intervals for example. Your fund might have performance until 30 June, another fund might only have data until 31 May.

When comparing the performance, you will also want to make sure you are comparing the same level of growth assets with different super funds. A balanced fund may have 80% in shares in one fund, but only 50% in shares in another, crazy right?

Reviewing your insurances

Before even considering moving your fund you should review your insurance, this is because if you roll over your fund these will automatically close meaning that you could have no insurance.

A super fund can hold three different types of insurance, these being Life Insurance, TPD Insurance and Income Protection. If you want to know more about what these are you can read our insurance article here.

If it’s all too hard

If you have gotten this far and you are thinking wow that sounds like a lot of work, we do offer a complimentary 30-minute meeting to talk through where we can help.

We are a Brisbane Financial Advice practice, and we can service clients nationally over the phone or via online calls.

Superannuation Calculator

Using Government Resources such as the Moneysmart Superannuation Calculator can help you see if you are going to have enough in your Superannuation fund in retirement.

Please note that this article is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. You should assess whether the information is appropriate for you and seek professional advice before making any investment decision.

This information is true and correct as of 1 July 2024, prior to making any changes we recommend you read Government resources and seek Financial Advice prior to making any changes.

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