Superannuation

People should review their superannuation on an ongoing basis. The superannuation legislation is forever changing, and along with it superannuation products also change quite frequently. This usually means that fees change as well, so to ensure that you are receiving the best deal on your super fund, you should review it at least every 5 years.

We prefer to see our clients every year to make sure that there aren’t any other areas of concern that we can help address with our clients. This entails looking at their insurances, estate planning issues etc. We usually charge a yearly fee, although this may sometimes be waived if there are insurances as well. The fee covers all contact with us, a yearly report on the client’s situation and any adjustments required to their strategy or structure.

We are not allowed to suggest a client switch super funds if they do not gain significant benefit by making that switch. That has to be either a fee decrease, or the gaining of a benefit which they specifically need or require, such as access to purchase direct shares as an example.

Younger clients may want to consider contributing a small amount, as little as $20 a week to their super fund. The long-term benefit of this could be as much as an extra $175,000 at their retirement.

Older clients whose kids have left home and their cash flow is a bit more free might want to consider salary sacrificing a chunk of their income to save tax and boost their savings. One thing that needs to be considered in every circumstance though is the individual’s cash flow and the contribution rules that govern how much someone is allowed to contribute to their super. 

There are pros and cons to gaining insurance cover through super. The types of cover available are Life, Total and Permanent Disability, and Income Protection insurances. Some of the pros are, in some cases cover can be cheaper than retail offerings as super funds can sometimes obtain insurance at ‘group’ or wholesale rates; the individual doesn’t have to pay the premiums from their everyday cash flow, so if the budget is tight this can help.

Some cons are that if the insured doesn’t contribute to super, then the premiums that are paid for out of your super balance may leave you with less in retirement; cover in super can often be pretty basic in nature. Often with TPD and income protection in particular, much better policies can be obtained outside the super environment. This is due to superannuation legislative issues, although product innovation is allowing the best of both worlds to some extent by offering the ‘bells and whistles’ outside of super linked to a basic policy inside the super environment.

Although this will have an impact on the client’s cashflow, the client only need pay about 1/3 of the cost of the policy overall from their own resources. The other 2/3 is covered by their super fund.

If people have had multiple jobs they most likely have more than one super fund. There is usually only one reason to keep multiple funds open and that comes down to insurances. If you can obtain all the insurance you require in one of your funds, or you pay for it outside of super, then you should only have one fund. Some people think it’s too hard, or they just can’t be bothered merging them all together. We can help in that regard by helping to find ‘lost super’ and helping complete the paperwork necessary to combine them all.