Superannuation is so much more than a low administration fee. We so often see TV ads for union-related superannuation funds, commonly known as industry funds, promoting low fees as if it is the only thing that matters.
It is not surprising, because what you are hearing is a provider of superannuation talk about the product features of their particular brand. Nothing more!
A superannuation provider is not licensed to give advice beyond their own product.
Find out how your super can be made to work well for you using the personal approach of a good financial adviser who specialises in superannuation and, importantly, using one that doesn’t have any bias towards any particular product provider.
Whether you are suited as member of an industry super fund, a retail super fund, a superannuation wrap, or a self-managed super fund depends entirely on your personal circumstance, your financial situation and your retirement aspirations.
Advice comes first! Which type of superannuation you need and which product you might ultimately purchase comes a distant second.
If you think your super is not working for you the way it should, and you are interested in improving it, then you might be interested in some general advice from an adviser who understands superannuation very well.
Whilst fees are important, here is a list of NINE other important aspects of your super to consider if you want your super to be the effective retirement vehicle it is supposed to be:
1. Is your super all in the same fund?
2. Does the fund you are in actually suit your needs from a control, investment management, tax effectiveness, and estate planning point of view?
3. Are you able to replace lost insurance benefits if you change super fund?
4. Do you have enough insurance in your super and is it tailored to your needs?
5. Do you know what to do with a government ‘defined benefit’?
6. Are your investments consistent with your tolerance for risk?
7. Do you understand the tax consequences of your withdrawal options
8. Are you aware that lump sum tax could apply to your benefit if you die
9. Are you aware that by being in the wrong fund that your spouse or young children could miss out on a lump sum tax refund in addition to your benefit if you die?
You have probably never heard of most of the issues I have raised above and, to be fair, they need to be explained to you. But as you can appreciate, superannuation is a complex area and there is so much more that matters besides a low administration fee. The points above are the areas that a good adviser will address to make an enormous positive difference for you.
With a good investment strategy and frequent reviews, your benefit can grow over time and then be repositioned to provide income for you when needed. But there’s much more!
With correct structuring; appropriate contribution and withdrawal strategies, personalized protection and inheritance planning, and an eye for tax consequences, you can potentially save a lot more money over the course of your working life, into retirement, and eventually, beyond death where your descendants safely receive your remaining wealth.
So as well as hearing about super from a superannuation product provider’s point of view, ask about super from a ‘how to make super work for you’ point of view from a knowledgeable adviser’s point of view.
General advice warning
The article above is general advice only designed to educate and heighten awareness of superannuation issues. It should not be regarded as personal advice because it does not take into account your personal circumstances, financial situation or specific goals. For personal advice that is tailored to your needs, please consult a licensed financial adviser.