Superannuation can seem a little daunting at first, but it’s actually pretty simple and will be of great benefit to you in the long run.
In its simplest sense, super is a way of saving for retirement. Your employer must pay a percentage of your earnings into your super account, and your selected superannuation fund then invests that money until you retire.
So it’s real money, but you can’t touch it for a few years – and it will grow during that time.
There are many different super funds out there, and plenty of different types of accounts. It’s definitely worth comparing retirement funds, finding your lost super, and consolidating your funds into the account. You might end up with a lot more money than you were expecting.
Choose a fund with lower fees
These can vary greatly and, whilst your fees might not seem like much at first, they can add up over the years and decades. Fees are either a dollar amount or a percentage, or both. Fees are usually deducted monthly and also after an action such as switching investments. Find a super fund that provides everything you want, for the best price possible.
Compare your fund’s performance with others
Each fund has its own investment experts working behind the scenes to ensure your money grows as much as possible. The results can vary greatly, so do a little research and go with the one with the best track record.
There are a few ways to compare super funds, with the most obvious being ATO’s YourSuper comparison tool. There are also a number of super comparison websites offered by private companies, so it’s worth checking them all out.
Combining accounts if you have more than one.
This is a big one. With each fund charging its own set of fees, you could be paying double or triple what you should be. It’s easy to consolidate your super into a simple account, and the sooner you do so the more money you’ll save.
When you’re ready to transfer your super into one account, jump online and follow these simple steps
- head to my.gov.au
- log in or create an account
- link your myGov account to the ATO
- select ‘Super’ and then ‘Manage’
- select ‘Transfer super’ (this option will only appear if you have more than one super account)
This will show you all of your super accounts and allow you to transfer your balance from one to another.
You can also transfer your balance to a new fund by:
- contacting the new fund directly
- using an ATO rollover form
Check your insurance before changing funds
All funds offer some level of insurance, including cover for death or permanent disability, as well as income protection. They’re not all equal, however, and your benefits could be greatly affected if you change funds.
When comparing the default insurance offered by super funds, pay attention to the premium rates, the amount of cover, and any exclusions or definitions that might affect you.
Consult with an expert if necessary, because it can make a huge difference.
If you’re leaving the country…
If you’ve worked and earned super while visiting Australia on a temporary visa, you don’t have to leave it here when you leave. You can apply to have this super deposited into your account as a departing Australia superannuation payment (DASP) after you leave.
There are eligibility requirements, but it’s a fairly simple process.
Know what’s involved before choosing a Self Managed Super Fund
There’s nothing wrong with choosing a Self-Managed Super Fund (SMSF), and it can be a financially rewarding endeavour. There is, however, a lot of work involved, and it can be risky, so you need to be 100% committed to looking after your own fund. It’s best to consult with an expert before taking this route and to consider the following risks
- You are personally liable for all the fund’s decisions – even if you get help from a professional, or if another member made the decision
- Your investments may not bring the returns you expect, as the market can be volatile
- You remain responsible for managing the fund even if your circumstances change, such as losing your job
- There may be a negative impact on your SMSF if there’s a relationship breakdown between members, or if a member dies or becomes ill
- If you lose money through theft or fraud, you won’t have access to any special compensation schemes or to the Australian Financial Complaints Authority
- You could lose insurance if you’re moving from an industry or retail super fund to an SMSF.
