Oh shit, where’s my super gone?
I seriously hear this all the time from new clients. Isn’t it true? The annual statement arrives and you stare at the page blankly!
“I thought I was supposed to make money in super, that it was meant to go up each year, what with the share market increases as well as the employer contributions,” you say to yourself.
But alas, you are nowhere closer to the idea of retiring than your super fund depicts! Depressing spiral of investor remorse and another year of woeful working arrangements.
Well, I will tell you exactly where your super has gone.
Did you ever ask about changing your investment strategy within your super?
If you don’t ask, you don’t get in life.
As superannuation has been set up under somewhat “safeguard” rulings in Australia, the MySuper default plan (for every fund that has not allocated its own investment strategy) is determined by the government to work the risk level in accordance with your age, not your risk/return preference. What does this mean? Basically, each fund will move from an assertive position to very conservative as you age, meaning that your fund preservation is paramount. However, if you are not receiving much money and are in your late 40s with a moderately conservative investment strategy, your money is not likely to move a whole lot on 2-5% returns, especially funds under $100,000.
Did you ever think to ask what fees are being deducted from your super each year?
Another question that super funds don’t offer upon releasing your account balance on the phone, (however, these days they are getting better with their information sharing).
My point being that
- member fees,
- administration fees,
- asset base fees,
- insurance premiums,
- adviser fees,
- trustee fees,
- withdrawal fees,
- performance fees
…are any or all of the fees that can be deducted and allowably so within your fund. Some are a few percent or even basis points of a percent, but it all adds up.
If you really want to see a slight improvement in your fund over the coming years, then I suggest you review your investment objectives and ensure you are able to take a more assertive position. This does not necessarily mean more risk, but with some education on investing, you may find income funds or shares to provide good dividend returns or better long-term performance.
And be sure to know exactly what fees are coming out each year and that what you put in is covering that and some!
And for those who are fee-conscious, it may actually be better to get an adviser to assist on reducing some fees. While they cost more to take care of your fund, they should be able to guide you to achieve lower fees and higher returns, which can be worth every penny you pay for the right advice.
For lost super, try www.ato.gov.au/superseeker