How to ensure your super fund is fighting fit

Super fund returns may hit double digits, but don’t become complacent.

Super funds may be returning generously, but don’t become complacent

According to research provider SuperRatings, Australia’s superannuation funds are on track to deliver double digit returns for 2017, in what is being called an early Christmas present for investors.

The SR Balanced Index that measures super fund returns recorded an increase of 1.3 per cent throughout November, meaning the interim calendar returns thus far are 9.9 per cent.

“In a year dominated by political uncertainty, nothing managed to deter the global rally we’ve seen since the start of the year,” said SuperRatings Chief Executive Kirby Rappell.

“Australia’s super funds are on track to deliver double-digit gains, providing there is no late sell-off before Christmas.”

“Despite the mining boom fading from view, resources shares have delivered through 2017 and helped shield investors from an otherwise lacklustre year for earnings. Despite the benefits of a strengthening Australian dollar for imports, especially in the first half of the year, this will have detracted from returns, but investors have still enjoyed some remarkable gains from the US market, which pushed to record highs late this year.”

And while super fund returns have been promising so far, according to money experts, now is not the time to become complacent about investment – especially when it comes to retirement savings.

“As we start to approach the new year, investors should take a moment to review their superannuation fund’s performance and make sure it is delivering value for money outcomes,” said Mr Rappell.

“Planning for the future can be a daunting process, but it doesn’t have to be complicated. Simple things like consolidating your super funds can lead to lower fees, and benchmarking your returns allows you to see if your fund is meeting its investment objectives or whether it’s falling behind the pack. Many Australians have insurance in their super, and it is worthwhile checking if your fund provides it and if it is appropriate for your needs.”

So, how do you make sure your super fund is fighting fit?

Well, for a start, if you have more than one fund, you should consolidate them. It means you’ll only pay one lot of annual fees and will make it easier for you to keep track of your savings.

Check the long-term performance of the top funds and use it as a benchmark to track your fund’s returns.

Then, dig deep into the fine print of your fund. Ensure that you’re paying for the right insurance, that is, that you’re not doubling up on life insurance or paying for unnecessary income protection cover. Compare your fund’s insurance offerings against others in the market and make sure your insurance is suitable for your needs.

Investigate whether or not your provider is giving you good value. You can check your fund’s fees, governance, insurance and member service environment at superratings.com.au.

Finally, plan for your future, by setting yourself a savings goal (if you have not yet retired) or calculating an ideal drawdown amount, leaving yourself plenty in store for emergencies or later-life spending. It may also pay to seek financial advice on planning for a secure future.

As with all things in life, it’s little changes now that can make a big difference down the track.

“With the value of compounding, a small change today can result in a big impact when you retire. Getting these small things right will help when the time comes to stop working, without having to make unenviable lifestyle compromises. Despite changes to the system, Superannuation remains a strongly tax-advantaged savings strategy’” said Mr Rappell.

“As they say, knowledge is power, and all investors should ensure they use it to their advantage.”

Funds have performed well since the introduction of compulsory superannuation for Australians in 1992. Here are the top 10 performing funds over the past decade.

 

How does your fund stack up? Do you have any tips on planning for a secure financial future?

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    COMMENTS

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    floss
    15th Dec 2017
    10:14am
    Thank god that the unions set up Industry funds to prevent ordinary Australians being ripped off by the Greed is Good group.
    Anonymous
    15th Dec 2017
    10:24am
    Yes - the unions rip people off in lots of ways - thieving bastards
    Old Geezer
    15th Dec 2017
    10:28am
    Thank God we can have SMSFs that well outperform the union funds too.
    mr.auspicious
    15th Dec 2017
    11:11am
    fyi Floss - greed IS good - when contained within boundaries
    imposed by the law and regulatory authorities.

    If it wasn't for the existence of greed within a democratic /
    capitalist economy, living standards overall, could be expected
    to deteriorate significantly .........in a worse case scenario the
    country could achieve third world status.......
    Tib
    15th Dec 2017
    11:12am
    Yes thank god for the unions. :)
    Anonymous
    15th Dec 2017
    3:46pm
    Unions are fantastic. We need them now more than ever, to save us from the Right-wing silvertails and greedy employers.
    Anonymous
    15th Dec 2017
    3:47pm
    Mr auspicious, the economist Adam Smith's self-interest rubbish was debunked decades ago.
    Anonymous
    15th Dec 2017
    8:16pm
    Unions are a good thing within reason. I was always a union member throughout my working life. My unions were not militant and did all that I expected, ensured my pay rate was in order and ensured my workplace was safe. Gladly, I had nothing to do with unions like the CFMEU which, so far, has paid out more than $10M in fines which is paid for out of members' dues.
    Cowboy Jim
    15th Dec 2017
    12:51pm
    Was happy with my fund but on getting to 65 took the money out, was not that much anyway because the fund started when I was 40. Too many changes over time worried me. They
    should leave things alone and people would try to contribute more. Fear that when the pot
    is a certain size the Govt might force you into an annuity and you cannot spend it any
    more the way you planned.
    Cheezil61
    15th Dec 2017
    7:03pm
    Agree, whilst I meed to keep my super where it is for another 4 plus yrs I do not trust any govt & as you say they'll be always trying to get the greedy mitts on our money & not much we can do about it as not allowed to touch it til preservation age & by the time I get there the rules will have changed another 50 times & prob be forced to take it in dribs & drabs allocated by someone other than me (the thieves!)
    sunnyOz
    17th Dec 2017
    12:01am
    Cowboy Jim - I too fear this is in the eye sights of the Govt, if not in the immediate future, but definitely in years to come. They see the pot of money and rub their hands with glee. They will control it, dole it out as THEY deem fit, and ensure no-one can claim a pension (exempting them of course).
    floss
    15th Dec 2017
    3:39pm
    Raphael your silver spoon is looking a little tarnished must be the venom that spews out of your mouth.
    P$cript
    19th Dec 2017
    2:15pm
    Those that Union bash don't realise that most of the conditions the have now is due to the same Unions they bash.
    The fines for illegal activities is only illegal due to laws put in place to limit the Union influence on obtaining better conditions for the workers.
    Once people could withdraw their labour, as this is what businesses are actually paying the workers.

    As for this bashing of industry super they were formed by the industry management and the Unions. So why is it only the Unions that are attacked.

    15th Dec 2017
    3:45pm
    Super is a labrinthine bureaucratic nightmare, totally opaque. It needs to be simplified. There are too many bullshit rules.
    Rae
    15th Dec 2017
    4:13pm
    Yes and for a vehicle holding fiat wealth it is way too expensive to run.

    Unless your SMSF is holding real assets the rest is as good as the Markets of investors and speculators say it is.

    I can't see how the Central Banks are going to undo all the debt. Can you?
    LiveItUp
    15th Dec 2017
    9:43pm
    Better start buying some put options for my cash holdings just in case.