Superannuation is often placed in the ‘too hard basket’ because of its complexity, the forms associated with it and the fact that it may not appear immediately relevant because of age.
However, it is prudent to look over and understand your Member Statement, material sent to you via NGS Super, as well as the information contained on the Fund’s website (www.ngssuper.com.au).
We find there is an exponential increase in member interest starting from around age 50, but there is a strong argument in favour of an earlier consideration of your super status. By age 60 there is no doubt of the importance of superannuation, but if you are just starting to think about super at that age, you may have missed out on significant benefits available to you during earlier periods of employment.
Here are some of the areas which should be considered as part of your personal superannuation audit:
- Dead accounts: on average Australian workers have over two accounts per worker (estimated at over $18 billion dollars in lost super) resulting from various jobs. In most cases this is not intentional and many fund members are paying fees which are superfluous. It is quite simple to consolidate accounts into your fund of choice and reduce fees/wastage.
- Investment choice: is the default option best for you? Your age and risk tolerance should be taken into account when choosing between ‘growth’ and ‘defensive’ investment vehicles. Do you have a strong preference for shares, property, bonds or cash? NGS Super will soon introduce a direct share platform for those who like to choose their own ASX 300 listed companies. Will this option suit your needs? Have you thought about your
risk tolerance? - Insurance: Income Protection and Death/Total and Permanent Disability insurance are true member benefits which have helped thousands of NGS Super members over the years. There are a number of different options associated with both types of insurance and it is wise to check whether the default option is correct for your insurance needs. For example, Income Protection has various waiting periods – 30, 60, 90 (default) and 180 days. Also, the level of salary should be considered as if your salary is greater than $80,000 per year and you have the default cover, you will not be covered for all of your salary. Similarly, it is prudent to check your level of Death/TPD insurance to ensure that it is adequate. You can apply for higher levels of IP and Death/TPD and the insurer will assess your eligibility. Income Protection also has automatic 'triggers' such as marriage, the birth
of a child or a new mortgage over your home which allow you to increase your cover without an assessment based on medical information. - Adequacy: will you have enough super at retirement? You can check our calculator to obtain an estimate of what your retirement benefit will be based on certain assumptions. Are you maximising the tax concessions provided by the government (within the contribution thresholds) via salary sacrifice? Have you thought about how much you will need annually for a comfortable, dignified and secure retirement? Have you considered what effect a salary sacrifice top-up now may have on your total retirement benefit? Have you thought about organising an appointment with a licensed NGS financial planner to help you maximise your investments?
- Estate Planning: as superannuation does not automatically form a part of your estate, it is not automatically subject to the laws of succession. Many members neglect to nominate a preferred beneficiary for their super and the Trustee must then determine (within the regulations) who should receive the benefit. If a member has made a valid ‘Binding Death Nomination’, the Trustee has no discretion and the benefit must be paid to the named beneficiary. Have you considered making a binding nomination to ensure your super is paid to your named beneficiary?
Now is a good time to conduct a full audit of your superannuation account and to consider all of the options available to you. A little effort spent in organising your super may provide you with more peace of mind and certainty about your financial future.
(Important information: The information in this article is general information only and does not take into account your objectives, financial situation or needs. Before making a financial decision, please assess the appropriateness of the information to your individual circumstances, read the Product Disclosure Statement for any product you may be thinking of acquiring and consider seeking professional advice.)