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When the statement for your super account appears in the mail or your inbox, it can be hard to know what to make of it.
Member statements are often full of figures and terms you don’t quite understand, making them a daunting read. But it’s important to check at least a few key points to ensure your retirement savings are on track.
Here’s a 10-point list of key points to help you conquer your fears about your super statement:
1. Your personal details
- Verify the accuracy of your personal details to avoid problems later on.
- Ensure your email and postal address are still correct.
- Verify that your super fund has your tax file number (TFN) or you may pay extra tax. This is generally noted as ‘supplied’. Without a TFN, your fund cannot accept personal super contributions.
2. Your account balance
- Check your account’s opening and closing balance to see how much you had in your account at the start and end of the financial year.
- Compare your account balances at 30 June over the past few years. Most funds show this on your annual statement.
- Understand the different components of your account balance:
- Preserved: Can be withdrawn if you satisfy a condition of release.
- Restricted non-preserved: Can be withdrawn when you leave your employer or satisfy another condition of release. Usually it only applies to contributions made prior to 1 July 1999.
- Unrestricted non-preserved: Can be withdrawn at any time, but tax may apply.
3. Your fees
- Check the fees listed on your statement. These usually include the administration fee (the cost of managing your account), which is split into:
- a: Account keeping fee
- b: Trustee operating cost fee.
- There will also be an investment fee, which is usually a percentage and is the costs involved in professionally managing the investments your super fund makes on your behalf. Your statement will also list an indirect cost ratio (ICR), which includes costs paid by the super fund to external investment managers. This varies depending on the investment option you have selected.
- Some funds also charge an investment switching fee and adviser service fee (the cost of the advice provided by your financial adviser, if you have one).
- Compare your annual fees with those of a similar super fund to check you aren’t paying too much. Consider switching funds if you believe your fees are too high.
4. Your insurance
- Check what insurance cover you have as part of your super account and how much you’re being charged for it.
- Review whether the amount of insurance provided is at the right level for your personal circumstances – particularly if things have changed at home such as a new baby, or you and your partner have separated.
- Think about whether your current level of protection would cover the regular bills or pay off the mortgage if something happened. This should be reviewed annually as your financial circumstances change.
- Ensure you’re not paying for insurance you don’t need if you hold an insurance policy outside super.
- Check if you’ve lost your insurance cover because your account was inactive. As a result of the 1 July 2019 Protecting Your Super reforms, you may need to reapply for insurance.
5. Your investment return
- Check how your investment option has performed this year and how your investment return compares to its benchmark. If its performance is similar or better than its benchmark, the fund’s investment team is doing its job.
- Consider whether your return expectations are realistic. If you’re unhappy with your investment return, compare it with the investment returns for the broader investment market and with similar super funds.
- Investment markets this year have been very volatile due to COVID-19, so you need to be realistic about investment returns and what your super fund can achieve in the current environment.
6. Your investment option
- Check the investment option listed on your super statement, as this explains your mix of investment assets. Each investment option has a different mix of local and international shares, property, fixed interest and cash.
- Think about whether your investment option (such as high growth, balanced, conservative or cash) reflects your current risk profile. Generally, younger fund members should have a higher allocation to growth assets, while members closer to retirement should lean towards a more defensive mix.
- Consider whether your investment option and level of risk are still appropriate for you, given the economic and investment changes brought on by the COVID-19 pandemic.
7. Your contributions and transactions
- Review the list of transactions for your super account during the year. This should include your employer’s contributions, any personal contributions you made, plus the fees and insurance premiums debited from your account.
- Check your employer put regular Superannuation Guarantee (SG) amounts into your super account. If SG payments are not there, contact your employer immediately.
- Check your employer paid your salary-sacrifice contributions into your super account if you set up a salary-sacrifice arrangement with your employer at the start of the financial year.
- Ensure all your personal contributions, such as tax-deductible and non-concessional (after-tax) contributions, are listed on your statement.
- Check your personal contributions are listed as the right type, for example, concessional or non-concessional.
8. Your beneficiaries
- Check the beneficiary nominated to receive the balance of your super account and any insurance benefit if you die. If you’ve nominated a beneficiary, the statement usually notes either ‘nominated’, or the person’s name if you’ve made a binding death benefit nomination.
- Remember to update your death benefit nomination if you have a new partner or have recently separated, so the right person gets your benefit.
9. Your retirement plans
- Consider if your retirement is on track, given the information in your member statement. Many super funds now provide a projection of your likely account balance at retirement on your statement.
- Think about whether your current level of contributions will take you to your retirement savings goal or whether you need to make additional contributions to get there.
10. Your satisfaction
- Review whether you’re satisfied with your current super fund. This isn’t listed on your member statement, but now is a good time to think about how you feel about your fund. Are the investment options it offers right for you? How does its customer service stack up? Is the education it offers, or the insurance cover you have, what you want or need?
- Consider whether you want to consolidate if you have multiple super accounts. Before making any decision, compare each fund and ensure you check any exit fees and whether you can get the same insurance cover if you merge your existing accounts.