Make friends with your fund: Money launches SuperBooster project
It's easy to take super for granted until you need it. Money's SuperBooster project is set to change that.
When it comes to relationships, there's probably one we all neglect. It's not hard to take super for granted. It's locked away and we don't really need to get up close and personal with it until we're thinking about retirement.
But a little TLC now can make a big difference when that time comes.
"People think they're a long way from retirement - the money is taken out of their salary and it will just be there later," says Steve Mickenbecker, group executive for financial services at Canstar.
"But there is a whole bunch of people who won't have enough, and because they haven't taken notice of it they haven't made a plan to add to their savings."
Starting a conversation with your fund is surprisingly easy.
With fund statements for 2018-19 starting to emerge, it's an ideal time to sit down, read the document, and work out where you are.
But Mickenbecker says digital technology has proven a ground-breaker in getting members to better engage with their super. The development of apps and mobile-
optimised websites has made it much easier to go online at any time, find out what's happening and take control.
Are you on track?
A recent report by the ARC Centre of Excellence in Population Ageing Research (yes, there is such a thing) found there's nothing quite like seeing your projected retirement income to focus your mind on your super.
The researchers analysed data from a trial in 2013 when industry fund Cbus sent 20,000 members an estimate of their likely retirement income, along with their current account balance.
Researcher George Smyrnis says seeing the estimate motivated members to make changes that can substantially change their retirement outcomes.
"We've found the best way to promote engagement is to create a picture of their future self and what their life will be like in retirement," says Steven Travis, executive for member growth and marketing at Sunsuper.
He says funds like Sunsuper have online tools that can show you your estimated retirement income and options to improve it, such as making extra contributions or switching to a different investment option.
Mickenbecker says most funds have online tools based on the Association of Superannuation Funds of Australia's retirement standard (which measures the cost of a comfortable or modest retirement income) so that members can see whether they're likely to have enough and, if there is a gap, what something like contributing an extra $20 a week could make.
Is your fund the best one?
This is the best place to start as a dud fund can leave you substantially worse off when you retire.
Chances are your fund was originally chosen by your current or previous employer and you may not have given it much thought.
Your fund's website will set out what the fund is about - who it's targeted at, what it's trying to achieve and how it works.
Retail funds are run by companies such as banks and insurers while industry funds are run by a board representing employers and unions.
In both cases the legal structure is the same - your money is held in trust for you and managed by a board of trustees.
If you are in an industry fund, it may be targeted at a particular industry - such as retail, building or hospitality - or it may operate across all industries.
There are no rules saying you have to be in your industry's fund. With most people now changing careers several times, Travis says you can take your fund with you when you change jobs or switch to a different one.
He says specific industry funds are tailored to workers in that industry, so it's worth checking whether it still suits your needs.
Beyond that, says Mickenbecker, choosing the right fund is pretty simple.
You want one with reliable and competitive investment returns, reasonable fees, cost-effective insurance if you need it and good service.
He says comparison sites can show how your fund stacks up against others.
Are you in the right investments?
Most members are in the default option of their super fund - usually a balanced or growth option with a bias towards assets like shares and property. However, you can choose a different option.
Travis says many funds now have online tools that test your appetite for risk to work out what investment mix is best for you.
Mickenbecker says some retail funds offer hundreds of options, largely suited to more sophisticated investors.
However, most industry funds offer a more limited menu of five or so diversified funds with different risk levels, plus possibly the ability to include direct investments such as term deposits and shares.
Some have indexed investments that track particular markets at a lower cost. Some funds also offer age-based or "lifecycle" options where your risk is gradually reduced as you get older.
Increasingly, members are also looking at the ethics of their investments.
Travis says most major funds are now run under ESG (environmental, social, and governance) guidelines, which consider the sustainability and ethical impact of their investments. This should be on the fund's website.
Many funds also have ethical investment options, and these details should also be online.
Take control of your account
Mickenbecker says about half the funds it surveys have apps to help you manage your super and more than 90% have mobile-friendly websites.
Commonly these allow you to join online, consolidate your super into one account, check your account balance and contributions, access historical statements, check your investment returns and fund manager reports, and switch investment options.
Making a personal contribution is usually as easy as doing a transfer from your bank. You should also be able to update your insurance beneficiaries and set up payment of your super when you retire.
He says some funds also send out automatic notifications whenever money is contributed to your account so you don't need to log on to check whether your employer has put in your money.
This is also a handy reminder to think about your super.
Travis says funds such as Sunsuper use analytics to predict where members are in their lifecycle and prompt them to take action such as checking their insurance or reviewing their investment options.
Sunsuper also does educational podcasts and has both online and physical seminars for members. He says some funds are even looking to run their annual general meeting online to keep members informed and allow them more input.
Most major funds now offer free limited advice to members.
You won't get a full financial plan, but Travis says your fund can help with questions such as whether you're in the right investment option, whether you're putting enough away, the best way to make extra contributions and whether you have enough insurance. This can be done over the phone or online.
If you need a full financial plan, most major funds have financial planners, or you can seek help elsewhere.
Insurance and other benefits
If you need insurance, buying it through your super fund can be cost effective as it is tax-deductible to the fund, which generally gets discounted group rates from the insurer.
But you don't want to pay for insurance you don't need and it pays to check the terms and conditions.
Mickenbecker says you can check your insurance in your annual statement or online and change it if needed.
You should also look at who will receive your money if you die, as super is not part of your will. Bear in mind that your dependants will not be taxed on the payout but if you nominate someone who isn't a dependant they will be.
It's also worth checking what other benefits your fund offers.
There are funds, for example, that have programs where members get discounts on such things as whitegoods and concert tickets.