How to Audit Your Superannuation at Home

We all know the basics of superannuation… in a nutshell, your 'super' is money set aside while you're working so you'll have money for retirement.Your money is put into a fund, where it's invested on your behalf by your financial adviser or a trustee, to help you earn returns and grow your savings. But how many of us know exactly what our superannuation is earning and if it will be enough for us to live on when we retire?

If you’re already a Claringbold client, we’ve taken care of the nitty gritty bits for you so that you know your super is getting the best return possible, but if you’re not, there are some things that you can do to review your super details at home.

As a super fund member, you will be receiving your annual statement soon, if not already, either electronically or in the post. Here’s a helpful checklist for reviewing the details contained in this important document.

 

Your annual super statement

1. Check your transaction summary for any hidden costs

Your super account’s transaction summary highlights ‘credits and debits’ for the financial year that has been:

  • Credits can include rollovers, personal and employer contributions, Government contributions (low-income, super contribution and co-contribution), as well as fee rebates and investment distributions.
  • Debits can include personal insurance premiums (a good one to check often!), Government taxes, administration, investment and advice fees, as well as expense recovery fees.

Given above, here are just a few areas to keep an eye on regarding your super account’s credits and debits:

  • In most cases, your employer is required to contribute 9.5% equivalent of your salary each year as a compulsory super guarantee contribution. Make sure your contributions add up.
  • Make sure you’re not paying premiums for insurances that you don’t need. Some super funds will set up a default insurance policy on your behalf when you open your fund. These are usually pretty general and any premiums paid from your super contributions will mean less money available to invest, which will affect your returns.
  • General debits. For example, as part of the Protecting Your Super Package, from 1 July 2019, new restrictions apply with regards to trustees charging members certain fees and costs.

 

2. Check your investment summary (your investment risk profile, asset allocation, and performance)

When investing inside of or outside of super, it’s important to determine an appropriate investment risk profile. Your investment risk profile defines your asset allocation, and is determined after consideration of the following:

  • your financial situation, goals and objectives,
  • your desire to align your investment values with your personal values,
  • your understanding of investment fundamentals (risk/return, asset classes, diversification, etc.),
  • your expected investment performance, time horizon, and tolerance/capacity for risk.

Your investment risk profile is very important and should be considered when making any investment decisions. If you’d like more information on this, please feel free to contact us for a free Investment Risk Profile Assessment.

 

3. Check your account balance (your opening and closing account balance)

An intrinsic part of SMART goal-setting is knowing how you’re tracking. Just as you may know your bank account balance, also take an interest in your super account balance.

In a similar vein, whilst it’s important not to compare yourself to others (as you are unique!), a little bit of perspective may serve to bolster your resolve further in achieving your financial goals and objectives.

Given above, and after consideration of your transaction and investment summary, here are the latest results regarding average super account balances by age and gender.

 

*ASFA. (2017).Superannuation account balances by age and gender.

4. Check your beneficiaries (your estate planning for super)

Unlike most other investments, super isn’t necessarily distributed via your will when you pass away.

Most super funds offer members the ability to make a beneficiary nomination, which helps trustees understand to whom and how you would like your super distributed upon your passing.

Given the above, regarding your beneficiary nomination, consider the following, for example:

  • your nominated beneficiaries,
  • your relationship to the nominated beneficiaries,
  • your percentage allocation to the nominated beneficiaries,
  • your type of nomination, whether it is binding or non-binding, and if it lapses.

 

5. Check your personal details

  • Are your residential/email  address and phone number details correct? These details are what your super fund uses for correspondence, for example, sending forms (notice of intent to claim a deduction) or any other updates.
  • Has your tax file number (TFN) been supplied? By supplying your TFN, you are enabling your super fund to pay tax on your concessional contributions at a maximum of 15%, and accept your non-concessional contributions.
  • If listed, are your date of birth, salary, occupation, and smoker status details correct? Depending on your personal insurance arrangements, these details may be linked to your personal insurances held inside of super.

 

Moving forward

Your annual super statement is a good prompt and opportunity to review your super.

As such, before you file your annual super statement away this year, take some time to review the details contained within this important document. We have put together the checklist above to help in this regard. 

As always, if you have any questions regarding your superannuation or any other financial matters, please feel free to call us on (03) 9801 7605.

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Narelle Allison

8 years practicing. Enjoys camping with family. Portfolio management & Xplan guru. Community minded ‍