23 Jul Article: Have You Checked Your Superannuation Membership?
How long has it been since you viewed your superannuation membership?
When it comes to Superannuation, you may have found a big brand Fund to put funds into many years ago, but does it still stack up?
There are little things that change within the Funds that can have a big impact on you and your Superannuation ‘nest egg’. Here are a few things you might want to consider.
If you’re anything like me, many many years ago (about 10 as a matter of fact), I had done my research found a Fund and tailored it to ‘my choice’ of where I felt it was safest and yet making a sound investment, however, today there are far more options and some things worth thinking about.
Administration fees: Have these increased since you last checked and are these based on my super fund activity? Administration fees will usually be deducted even if you haven’t contributed to super in a while.
Here’s an example: You’re a university student who works a casual job for a few months, but then you have to stop due to the changes in your university class schedule (as class times change every semester) and they don’t fit into your work schedule. The Fund in most cases will continue to deduct the admin fee from your balance each month to cover administrations costs to manage your funds on your behalf. You may need to check your balance as if you have a small super balance due to being quite new to employment, your fund can go backward rather quickly and possibly dry up. It’s a catch 22 on this one if you’re just starting out so have a talk to your Fund and ask for advice.
Salary Sacrificing into super: Say you get a pay rise and you can manage without it – consider asking the payroll officer at your place of work to put those extra dollars straight into your Superfund from your regular pay. These funds, once received by the fund, is taxed at a discounted margin of only 15%, making it a worthwhile investment into your retirement. However if you decide to take this as a part of your wage you may have to pay 19-37% in tax or even higher.
The thing is, you do need to know the difference between ‘Personal Super Contribution’ and ‘Salary Sacrifice’ as they both work a little differently and this affects the tax margin.
The maximum amount of contributions allowed each financial year is $25,000 and that amount includes your employer’s 9.5% super guarantee contributions and your own salary sacrificed contributions together. So be sure to check your ‘Pay Advise’ for the total paid to date and calculate your annual super payment by your employer first when considering making extra payments into your ‘nest egg’.
Life Insurance: Through your fund, this is also worth looking at as it can be more cost-effective if taken out through your super fund rather than a totally separate insurance cover.
Look at the policy features and ask the price based on your age, are you a smoker etc. then compare it with the ‘Life Insurance’ or ‘Work Cover’ through your Superfund. I found it was far cheaper to have the monthly premiums debited from my Superfund than it was to go through an independent insurer, however, be sure to read the ‘Product Disclosure Statement’ if you were between jobs or were away from work for a period and was considered to be unemployed (even for a short period), unless I was in part-time employment at a minimum when an accident happened, I may not be covered even though my policy is still in place and I was still making my monthly payment.
It might be time to have another look at your Super and make sure it is working FOR YOU!
A, N. (2019). Home page. [online] Ato.gov.au. Available at: https://www.ato.gov.au/ [Accessed 22 Jul. 2019]. (multiple superannuation articles for knowledge)