Your superannuation works as hard as you do, but it’s vital to keep your fund in good health to ensure it delivers optimum benefits.
Just as you consult doctors and other health professionals to stay fit and enjoy life, you need to consult experts on the health of your fund.
Yet only about 5 per cent of super fund members ever get advice, according to Adrian Gervasoni, executive manager of advice with Industry Funds Services [IFS].
Most industry funds, and some retail funds, have in-house advisers who provide free advice to members.
This is known as intra-fund advice and is generally accessed by telephone.
“That generally covers asset allocations [choosing which investments you want your fund to be in], insurance levels, how much you have in super and some retirement issues,” Mr Gervasoni said.
However, those advisers work for the fund and only offer advice on moving your money around inside it.
If you are relying solely on that type of advice, you should find out online what returns your fund is earning and the fees it is charging to ensure you are with a fund that is performing well.
This is crucial as “low fees and good returns are vital when it comes to building a balance,” said Ashley Bishop, adviser with Verse Wealth.
If you want to get more detailed advice on your super and overall finances, then most funds will connect you to a financial planner who can help.
IFS has 105 certified advisers working under its licence working across 27 funds – some as direct employees and others as consultants to a number of funds.
Other industry and retail funds can put you in contact with suitable advisers.
Keep it personal
You need to have a personal relationship with an adviser, so start with the basics.
“Make sure you are on the same page. Find out what fees are being charged and whether they are one-off or will be charged on an ongoing basis,” said Rob Goudie, adviser with Consortium Private Wealth.
“A good adviser will be able to make the complex sound simple as educating the member to be able to make informed decisions is very important.”
Once you choose an adviser, ask them to review your asset allocation.
A $100,000 term deposit would have paid income of $6500 12 years ago, but now rates have fallen so far it would only pay $500,” Mr Goudie said.
There are two things an adviser needs to be able to help you with.
“It is not just about investment advice, it is also about an understanding of all the complex tax and legal aspects of superannuation,” said Craig Day, head of technical services with CBA’s Colonial First State.
Putting all that together will enable your adviser to “identify what your objectives and desires are and how they can be attained,” Mr Day said.
“People want to know if their super is enough to meet those objectives and, if it’s not, where it needs to be [and] what strategies can be implemented to achieve them,” he said.
People will have different needs depending on their age.
For example, workers nearing retirement may want to find out if they should concentrate on paying off the rest of their mortgage or contributing to superannuation, Mr Day said.
The answer to those questions are complex and your adviser will be able to help establish a plan based on your unique circumstances.
If you have investments outside super, then your adviser will help you determine whether they are best kept where they are or moved into your super fund.
“Super is a tax-free environment when you are over 60. But there will be other considerations like the capital gains tax you would pay if you sold, and the limits [$300,000 every three years] on non-concessional contributions to super,” Mr Bishop said.
Another option for building super once you hit 65 is a down-sizer contribution that allows spouses to contribute up to $300,000 each to super if they sell the family home.
Other factors to consider in the run up to retirement include rebalancing super balances between partners.
Where one partner has taken their super and another is below preservation age (55 to 60 depending on when you were born), moving super into the account of the person still working could give the retired partner a higher age pension payment, Mr Bishop said.
Taking a lump sum on retirement to pay off debts or renovate a house could also be a wise move. As could pushing back your retirement age by a couple of years.
“Retiring at 67, not 65, can have a significant difference to your account-based pension because you contribute for two more years and put off drawdowns,” Mr Day said.
There are lots of possibilities and opportunities but it pays to get professional assistance in developing a plan.
The New Daily is owned by Industry Super Holdings