Superannuation mistakes and some useful tips

When speaking with my wife recently, a question originated in my mind. Are there some common mistakes that people make with their superannuation resulting in losing some portion of their retirement savings? I have definitely done it at one point which is why I am writing this blog so that other people don’t have to lose their hard-earned money.

Common mistakes to avoid

Having multiple super accounts and not consolidating them

Having arrived Australia in 2018, I worked as a cleaner, a glassie in a restaurant, storeperson in a warehouse, as well as a delivery driver in a restaurant when I was studying. One thing that never crossed my mind during this whole time was my superannuation. Changing employer everytime, I just chose to get my super in their default fund which resulted in me having 3 super accounts at one point in time. The worst drawback having multiple super accounts is that you will be paying fees on each of them. Also, if insurance is selected, the funds will deduct insurance premiums on each of the accounts. So, the question is, how do we consolidate them and save ourselves from paying extra fees and insurance premiums?

The answer is quite simple. Here are the steps you can take to consolidate your super:

1. Login to myGov or signup for a new account
2. Once logged in, on the homepage, you have the option to link ATO services if you haven’t done so already.
3. Once you have linked to ATO, clicking on it will take you to the ATO homepage, select ‘Super’ from the menu and then ‘Manage’
4. If you have multiple super, the ‘Transfer super’ option will appear. This will show you the list of all superannuation accounts and let you transfer balance from one to another.

Superannuation Insurance

Almost all superannuation have some type of insurance options available nowadays. Some of the most common ones are:

• Life Insurance
• Total and permanent disability insurance
• Income Protection insurance
• Temporary disability insurance

I personally pay for all the insurance that the superannuation fund provides. It is completely upto you to opt for the insurance or not. Cancelling or taking insurance can be done by logging in to your superannuation account i.e. from your provider. If you haven’t got your account, search them up in google and they will have a very straightforward method to sign you up.

Another thing to note is, as per the new government rules, from 1 April 2020, super funds will no longer be able to offer insurance automatically to new members if any of the below applies:

• the new member is under 25 years old;
• the account balance for the new member is less than $6,000.

If you fall into one of these but still want insurance, you will need to login to your super and activate it manually.

Some other useful tips

Compare your superannuation performance/fees

The ATO has a very useful tool that can be used for comparing superannuation funds. You can also integrate this tool into your myGov and compare super based on your current balance and age. This lets your compare performance, fees and returns.

Link to the tool here: https://www.ato.gov.au/YourSuper-comparison-tool/

Figuring this tool’s existence was a game-changer for me. It is super easy to compare and make informed decisions with it.

Choose your investment type

The money in your superannuation account is getting invested across various sectors. There are various options that are available to us for customizing the investment options such as high growth, balanced, capital stable, cash, shares, bonds, etc. You can also choose to contribute certain percent of existing/future contributions in any of these sectors. Choosing investment type that best fits our life situation gives us a better control on our superannuation and also helps us grow our retirement savings.

Summary

• If you have multiple superannuation accounts, choose one that is the best and consolidate all the funds from other accounts in that fund. This saves you from paying fees and insurance premiums to multiple funds.
• Choose the best type of insurance that suits you. Login to your superannuation fund to cancel or activate insurance.
• Make better informed decisions by comparing various superannuation funds by using the ATO Super Comparision Tool.
• Login to your superannuation account and you are able to change the investment options if you want to. Do your research before changing the options.

In conclusion, managing your superannuation is an important aspect of planning for your retirement. By avoiding common mistakes such as having multiple accounts, not choosing the right insurance and not comparing different funds, you can ensure that your hard-earned money is working for you in the best way possible. By taking the time to understand your superannuation and making informed decisions, you can build a more secure future for yourself and your loved ones.