Articles and information on superannuation usually fall into one of two types – what you need to know when you are saving it, and what you need to know when you are spending it. Much of the coverage of superannuation funds can be similarly narrow. Comparing year-on-year or month-on-month returns gets a lot of attention. But there are so many more aspects to super than just annual returns. Today we focus on five different ways you can evaluate your fund to ensure that you are getting value for money.
Here’s our five-point checklist to guide you through your evaluation:
Is your super fund meeting your needs?
There are five key points of delivery which you can easily check to determine if this is the case:
- Reporting
- Specific assistance and information
- Net benefit to member statements
- Age specific guidance and prompts
- Age Pension support
We’ll look at each of these points in further detail below, but first let’s consider what your fund is actually required to do by law under the Retirement Income Covenant. This requirement came into law on 1 July 2022. It followed the report of the Retirement Income Review (RIR) in 2020, which found that the ‘spending’ phase of super was not well supported at all by most super funds. Yet funds were probably best placed to offer guidance to members as to how and when to move from the saving phase into a drawdown phase after they reaching Age Preservation age.
You will recall that a July 2023 report (released jointly by ASIC and APRA) found that there had been both a ‘lack of progress’ and insufficient urgency’ by the funds. Yet this is a legal requirement so it is important that you check that the services that your fund has on offer in this regard comply.
1. Reporting
You will receive (at least) an annual report of contributions to your super fund for the past financial year as well as earnings and net balance as at 30 June. Good funds send thorough reports, often covering how your earnings have increased, depending upon your setting, be it conservative, balanced or aggressive. Many funds also show predictions of your eventual retirement nest egg when you reach Age Pension age. Some will show alternative predictions if you alter your settings. It is reasonable for retirees to expect to receive all of this information so that you can review your risk tolerance and the results of your settings to date and how they may change in the future.
2. Specific assistance and information
There are times when you will need a simple question answered. Good funds have sufficient resources to respond to such queries. It’s easy to forget that a super fund is a service for which you pay, via your fees. So as the customer, your fund has a vested interest in retaining you as a member. So it shouldn’t be difficult to navigate their website, obtain straightforward information and answers to your questions in a timely manner.
3. Net benefit to member statements
It shouldn’t be rocket science to work out how much extra super you have from one financial year to the next. The best practice funds provide this information, set out in an easy to view manner. Information should include:
- Opening balance
- Net cash flow
- Net investment returns
- Admin fees
- Total tax paid
- Insurance fees
- Closing balance.
(Cash flow should also identify your contributions). If your annual benefit statement doesn’t cover at least this amount of information, then you are within your rights to ask your fund to send a more detailed statement.
4. Age specific guidance and prompts
The Australian Retirement Income System is specifically managed according to your age and life stage. This information is already in the hands of your super fund, so the better funds are very good at alerting their members to trigger points when they will need to make new financial decisions or are able to access different options. For instance, Age Preservation age offers many different options for those who can at last access their super. As do Age Pension age, when a majority of retirees have a very real chance of being eligible for fortnightly income.
5. Age Pension support
A recent survey conducted by Retirement Essentials revealed that 76% of member respondents believed that a fund should provide support with the Age Pension and managing super in retirement. This complements the aim of the Retirement Income Covenant. That’s because there are so many options when you can access your super and understanding how super and the Age Pension work together is critical. But complicated! Retirement Essentials believes that the provision of such information and guidance should be par for the course for all funds.
How does your super fund rate? Are you happy with the information and support you are receiving? If not, is it time to consider moving to a more active fund? It may be smart to arm yourself with the knowledge you will need first.
There are two consultations which may help those wishing to review their fund’s performance:
It would help if you could suggest which funds meet these criteria
Should you move the portion of super invested in stock markets once retired? It’s seems a risk, we are in our 70’s and the losses in the past few months have been terrible
Thanks. Vicki
Hi Vicki, thanks for reaching out. It is really common to feel some anxiety when investment markets aren’t doing well. How well we tolerate investment risk often changes over time and perhaps how you are currently invested is no longer the best approach for you. I always like to take the approach of taking the risk you need to take, but it’s sometimes hard to know what that might be. To get a clearer idea and some guidance on the amount of investment risk you may want to look at maintaining I recommend you book a strategy consultation with us to talk this through in more detail. We can not only look at how you feel about investment risk, but also whether you need to keep as much in markets as you currently have to still have enough to last through retirement. You can book a Strategy Consultation by clicking here. Best wishes, Nicole.
I believe the super industry is very, very slack and have so much money pouring in without any effort on their part. “Non for profit” seems to mean that they take little notice of performance and costs and do little. There modus operandum is to provide as little “real” information as possible so we, their customers are kept in the dark.
Just to find out what “real” return one is getting in their pocket is difficult.
Hello. Yes I’m one of obviously many who’s had a disappointing time with the poor service information from Superannuation Companies. I’ve changed Companies twice over recent years from First Choice First State to The Commonwealth Bank to the latest Company being Hesta! Unfortunately since the changes, the Services by each of them haven’t improved!
After not hearing anything and long long silence being deafening (the same problem with the previous Companies!), I rang Hesta to advise of my concerns! Of course there was no answer so I had to respond to an pre-recorded tape and request to be contacted back. Later after receiving a call back I advised the Rep. of their unsatisfactory service and I wanted over the preceding period was some very basic information on how my meagre Portfolio was performing! Was it doing okay or could it possibly be doing better and then therefore should I then talk to an Adviser. That led to the Rep. saying I can’t tell you very much at except what the Spread of my Portfolio was and its current value! I requested again please, “under the current Financial climate, could my Portfolio being doing better or is doing okay as is! Same answer I gave up and requested a call back appointment!
This later was received where I was informed that my Portfolio could do better and suggested if I’d like to place 50% of it into just a slightly higher risky-er Portfolio and I could make the change myself online! After consideration and and on the following day, I decided to do this however it failed as On-site Online was lacking clear guidance! Some time later I received a Service questionnaire Evaluation which I gave a low Score too and requested t be contacted back again! The following day I received a call from a Hesta Rep. a very nice and informative non Financial Adviser who I informed of my dissatisfaction and that I was considering leaving! This chap, was most helpful and assisted while chatting with him, the step by step process to change my Portfolio! He also provided without me having to ask, the Percentage breakdown of my Portfolio, where and what it would invested in! This I’d never been informed of before which gave a better understanding of the Portfolio changes! This I was most appreciative of, advising him as well as made the change to my Portfolio! I also advised him that due to his help, patience and assistance, I would remain with Hesta and not leave! Thank you.
Hi I have my funds in conservative balance and stable bothe not doing well what can I change to
Hi Noel, thanks for your question! Each superannuation provider offers a different range of investment options. Which choices are best for you probably requires a few things, including an understanding of how much growth/investment risk is in each option (names such as ‘balanced’ and ‘conservative’ often don’t tell us how risky an option is), and also an understanding of what your personal risk tolerance might be. To talk this through in more detail and provide guidance on how to choose appropriate investment options for yourself we can help you in a Strategy Consultation appointment, which you can book by clicking here. Best wishes, Nicole.