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Superannuation health check: what should you review and consider?

Superannuation health check: what should you review and consider?

When it comes to your superannuation fund, there are certain things you should review regularly to ensure it is performing optimally.

Much like a health check, it’s important to assess whether your super fund is staying on track to deliver projected outcomes for your retirement, or whether some tweaks are needed to enhance its overall performance.

From reviewing your fees to assessing your fund’s performance, here are some things you should consider:

Review your fees

All superannuation funds charge fees. These can include administration fees, member or account keeping fees, asset management fees, establishment fees, and investment fees.

It’s worth reviewing your current fees to see whether your current fund or superannuation structure remains appropriate for you.

Assess your super fund’s performance

The last 12 months have been a rollercoaster and you may have noticed a change in your superannuation fund’s performance.

Individual results will vary, depending on the investment options you hold within your super fund.

If you have a higher percentage of growth assets, then it’s likely that your returns are lower than the average given the recent falls experienced across global share markets over the past six months.

Review your investment strategy and asset allocation

Given the volatility and investment falls across international share markets over the past six months, it’s worth reviewing your super fund’s asset allocation and whether you are comfortable with the current allocation to growth assets (e.g. international shares, Australian shares, property and infrastructure).

Comparing funds can help you determine whether you are happy with your current provider or whether you need to think about making some changes to your super fund or its investment strategy.

When reviewing your risk profile and/or investment strategy, it’s worth considering what type of investor you are.

How you choose to invest your money will depend largely on the type of investor you are. When it comes to superannuation, there are three key considerations when choosing the right investment:

1. How long do you want to invest for?

Your investment time frame will involve how long you plan to invest your superannuation funds before you retire, as well as taking account of your desired retirement lifestyle and how long you would like your savings to last once you do retire.

Even if you don’t know when you’ll retire, thinking about your investment time frame can help you choose an option that matches your goals.

2. How hands-on do you want to be?

Choosing the right investment can impact how much your savings will grow and how long it will last.

Before making your choice, you need to know how much direct control you want over your investments – or how ‘hands-on’ you want to be.

3. How much risk are you comfortable with?

Different investment time frames and options come with different risk levels. An investment’s risk level largely depends on how long you invest in it.

For example, within a short time frame (five years or less), the main risk to your investment is short-term fluctuations that could reduce your savings.

On the other hand, investing over a longer period (10 years or more) means that your investments will probably have time to ride out short-term ups and downs. Your main risk over the longer term is keeping up with wage inflation.

Different types of assets also have different levels of risk. Consider how you might offset this risk by having a diverse portfolio of different investments.

Check your insurance

Insurance is another key aspect of your superannuation that you should check.

Some super funds provide a set level of insurance as a standard inclusion when you open your account, but it’s not uncommon for people to simply leave it unchanged.

We recommend reviewing your insurance to find out exactly what it covers you for. Most often, it is life insurance, total and permanent disability cover, and income protection, but the amount can vary.

Some questions you should ask are:

  • How much would your beneficiary receive if you passed away? Would that be enough to support them?
  • If you had an accident and were unable to work, how much of your income would you receive through your income protection insurance? Will that cover your expenses?

You should also assess the waiting periods, any exclusions and, of course, the insurance premiums that will be regularly deducted from your super balance.

Professional advice can be extremely helpful in determining whether your insurance adequately protects you and your family.

Check your beneficiary nomination

It is always worth reviewing the beneficiary nomination for your superannuation, and even checking if you have one in place.

Superannuation is not an estate asset; on death it does not automatically flow to the estate of the deceased.

The trustee of the super fund will generally pay a death benefit in accordance with the governing rules of the fund and relevant law. A binding death benefit nomination is a way to override this trustee discretion.

Put simply, a binding death benefit nomination is a legally binding nomination that allows you to advise the trustee who is to receive your superannuation benefit in the event of your death.

In order for a nomination to be binding, it must be valid. One of the requirements of validity is that only dependants can be nominated.

Depending on your circumstances, however, you can nominate one dependant or a number of dependants.

Need superannuation advice?

Navigating the ins and outs of superannuation can be complex. At LDB Group, we’ll help you make the most of your superannuation to ensure you are financially secure in retirement.

Call us on (03) 9875 2900 or fill in the contact form below to speak with one of our experts.

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