Even if you think you have the details of your fund covered, the latest annual report from the Superannuation Funds Tribunal shows that, if you’re not completely savvy with your super fund, you can still receive a nasty shock in retirement.
The tribunal’s report reveals the many instances of what can go wrong with super, and the importance of double checking your fund’s fine print.
One case study shows how in 2003 one member wrote to his fund to cancel his death and disability cover. He received a letter from his fund which he believed confirmed the cancellation of his request. Ten years later, he noticed that payments were still being withdrawn from his account. When he complained to the Tribunal, it found that wording in the original letter was unclear, but the Tribunal only refunded the member’s insurance premiums for a period between 2003 and 2004.
This is because he received another letter in 2004 telling him his insurance details had changed and that he had to ‘opt out’ if he didn’t want cover. Thinking that this letter did not apply to him because he’d already cancelled his insurance, he ignored it. Hence, the super company automatically reinstated his insurance and he was charged accordingly.
This is not the only type of retirement shock faced by fund members. Another woman who retired in 2006 and in 2008, left her fund and used her super balance to start her own self-managed super fund (SMSF) and also to pay off a loan.
Six years later, her super fund noticed that she had been overpaid two years’ worth of returns and demanded repayment. The member contacted the tribunal to see if she was liable for these repayments six years after the fund was closed. Turns out, she was, as the Tribunal ruled in the fund’s favour.
Other tales of overpayments that are discovered years later are not uncommon.
The report highlights the importance of double checking the fine print on your super fund, closely reading any correspondence sent to you and monitoring statements for any fees charged, withdrawals made and other possible miscalculations.
If these errors are spotted early on, you can avoid a nasty shock in retirement – when you can least afford it.
Do you read the fine print on your super statements? How well do you know your superannuation?