There are so many reasons you should consider early release of your superannuation as a last resort. From insurance implications to affecting your balance and cashing out at the bottom of the market, you can find more information about what to consider here.
Below are some great ways to get interested in your super that can make a positive impact on your retirement. Note that all advice is general only and you should consider your own circumstances when making any financial decisions.
1. Check your fees
You can’t control how your superannuation fund performs every year but you can control how much you pay in fees. Call your super fund, or log in to your online account and check the Product Disclosure Statement (PDS) for the investment, administration and performance fees you currently pay. You can also find most of this information on your last statement. Don’t forget to check the fees that match what investment option your superannuation is invested in.
You can compare your fees with other super funds using a comparison tool such as Canstar. You can also use this MoneySmart Calculator to see how fees will impact your super balance and compare fees between two different funds. Switching to a low fee fund could mean the difference of tens of thousands of dollars at retirement.
2. Consolidate your accounts
If you still have a super account since that retail job in your twenties you’ve never closed, or if you have used each employer’s default fund every time you have changed jobs, now is a great time to consolidate and review your accounts.
You can find all the super accounts linked to your tax file number by logging into MyGov and click into the ‘Australian Tax Office’ section. You will be able to see all your current super accounts at the bottom of this page.
Click ‘check Super’ to find out the details of your different accounts.
Spend some time comparing the fees that you pay on these different accounts. You shouldn’t automatically roll all your super into the fund that has the highest balance. Also consider what default insurance cover you currently have in each fund, and if your employer will let you nominate your own fund for employer contributions.
Once you have decided which fund is right for you, head to the ‘super tab’ and click ‘transfer super’ to begin the process of consolidating all your accounts.
Note: if you are currently looking to complete an income protection or Total Permanent Disability claim, seek legal advice or see a financial counsellor before consolidating your superannuation.
3. Check your investment options
Most super funds have a range of investment options within their accounts that allow you to choose how your money is invested. These options usually include at least Growth, Balanced and Conservative.
When your employer sets up a superannuation fund for you, the default investment option is often set to ‘balanced’, however you can nominate how you want your funds invested and a number of funds will let you split percentages into different allocations.
When choosing an investment option it is important to consider your age, balance and tolerance to risk. You can read more about the different options on MoneySmart, and you can also use the same calculator from earlier to compare your balance in different options. Don’t forget to check how the fees change if you select a different option.
For more information on risk tolerance, check out this great article on Smart About Money.
4. Get the right insurance cover
Most super funds provide a default level of insurance cover for accounts with a balance of $6000 or more that are currently active (or have been active in the last 16 months). These insurances can include:
Death (or Life cover): pays a lump sum or regular payments to your beneficiaries when you die or have a terminal illness.
Total Permanent Disability: paid to you if you become permanently disabled and it is unlikely you will be able to ever return to work.
Income Protection or Continuance: paid as an ‘income’ to cover you for a certain length of time if you are unable to work due to an illness or disability that is not permanent. Most super funds do not cover you for income protection if you lose your job or are made redundant, so it’s important to check the PDS if you want this type of cover.
It’s important to factor in your assets and liabilities, and how your family and finances may be affected if you can no longer work. Most superannuation funds will have a calculator on their website that you can use to estimate how much cover you will need.
Moneysmart also have a calculator for life insurance and some guidance around working out your Income Protection Insurance and Total Permanent Disability Insurance. Most super funds will have a specialist insurance team that can help you calculate your insurance needs and let you know the weekly cost to be covered through your super fund.
It’s important to note that under the current legislation if you are under 25 years old, you will generally need to ‘opt in’ to your super fund’s insurance offering.
5. Confirm your contributions
If you are over 18 and earning more than $450 a month, your employer should be contributing at least 9.5% of your earnings into super. It’s important to check that employer contributions are being received by your nominated super fund or the company’s default super fund. Your
employer must deposit your super at least once every three months.
If you believe you are not receiving super or your payments are incorrect, you can find more information and lodge an enquiry through the ATO website.
You can also choose to make your own voluntary contributions – you may wish to maximize your nest egg, or simply contribute enough to cover your insurance fees every week. Some employers will let you do a ‘pre-tax’ contribution or salary sacrifice.
You can also make your own non-concessional (after tax) contributions into your superannuation of up to $100,000 per financial year. This would include transferring money directly out of your bank account into your super.
There are plenty of easy ways to make the most out of your superannuation. If you are struggling with debts or are looking to withdraw your superannuation early, reach out to a financial counsellor here or call the National Debt Helpline on 1800 007 007.
Financial Counsellor NRN20275
Financial counsellors are not financial advisers. You should consider seeking independent legal, financial, taxation or other advice to check how the information in this article relates to your unique circumstances.