Is it time to review your Super?
The productivity commission released a report late March, enlightening the public of the dangers and significant losses of not consolidating and/or shopping around for your super fund. Their findings and recommendations are set to trigger some of the biggest changes to hit our superannuation industry since it became compulsory almost 30 years ago.
The two-year productivity commission review found that many savers were either in an under-performing fund or their funds were being hit with excessive fees, taking more than what they were putting in. Financial Services Minister Kelly O’Dwyer said that lower income earners and younger people are being hit the hardest with higher fees and insurance premiums, most of the time for “products they don’t want or need.”
The review found that millions of Australians aren’t making the most of their super fund which means they will most likely struggle in retirement. The superannuation industry in Australia is today valued at $2.6 trillion, with fees from these funds making up 1% of that, placing their earnings at $260 billion. However, it was found that one-third of accounts with these fees were, in fact, a double-up account, meaning the everyday Australian with two or more super accounts were paying twice for things, like insurance cover.
Findings also showed that some funds were performing better than others, leaving Aussies in what’s being called a ‘lottery draw’ in terms of what you end up with in later life.
To put it into simple terms, the review found that:
- Almost a third of default super accounts are serious underperformers.
- Another third are unused or multiple super accounts, leaving members paying double for things like insurance policies, overall costing $2.6 billion per year.
- A 55-year-old today could gain $61,000 by retirement and someone starting a job today could gain an extra $407,000 by the time they have retired in 2064.
The report makes recommendations to deplete or merger these lesser performing funds and eliminate instances where employees are being ‘defaulted’ into a fund of their employer’s choice, along with allowing the public easy access to seeing the top 10 performing funds.
Overall, the report’s aim is to educate the consumer about their super and to help the everyday Australian save for a prosperous retirement. If you want to know more or to review your current Superfund/s, contact a MWL Financial Planner for your free, no obligation, consultation meeting and take control of your future.