Oh, you’re too young to think about superannuation. Right? You’re only in your 20s or early 30s or maybe you’ve just started your first job. Why waste time thinking about retirement? It’s decades away.
Erm… you know what’s coming, don’t you? You guessed it: wrong answer.
No matter what age you are or how far away retirement is, if you’re working, your money is already going into superannuation – whether you want to think about it or not.
So to help kick-start your new romance with your superannuation (psst the nerds in the industry call this ‘engagement’, but we like romance better), here are three easy things you can explore to fire up the passion.
First, however, a little bad relationship reality story.
There’s about $13.8 billion in unclaimed superannuation money, across 6 million accounts sitting out there and unfortunately a lot of it is thought to belong to young workers.1 Multiple jobs, casual shifts and part-time work are often a typical breeding ground for unclaimed super and the beginnings of a rocky romance with your superannuation savings.
So, our first tip is to make sure it’s not your retirement money that’s out there, lost and abandoned.
The Australian Taxation Office is the official matchmaker for unclaimed super, so jump onto its website, from here you can lookup “Searching for lost super” 2 and you’re away. You can search for lost super using a mygov account linked to the ATO, by phoning the lost super search line or the old fashioned way – by using a paper form. You can also ask your super fund to conduct a search on your behalf. Whichever way you choose, make sure you have your tax file number handy, as it’s the key to all things super – and find out if any of your money is sitting around waiting for you to claim. Don’t be shy about it. After all, that $13.8 billion in super belongs to someone – in fact, several million someone’s – so you could be in for an unexpected windfall to your retirement savings.
Now we’re pretty sure you’re going to like our second tip too: get to know your super and see if you want to consolidate multiple accounts (if you have them) into one. It could make managing your superannuation easier and could stop you from having multiple sets of fees and insurances you might not need. So it’s good to think about what you want from your superannuation fund and assess if you need more than one account.
27% of us have more than one super account, 3 but here’s a hint: one’s usually enough for most people. And again, these multiple accounts, sometimes accidentally or mistakenly, are often created by frequent job changes, lots of casual work and, ahem, slacking off in the super romance department.
Keep tight with your super account details and have this information handy when you sign on for a new job. It’s one of the best ways to avoid two-timing your superannuation, as you won’t be opening additional super accounts you don’t need. For each account, you’ll probably be paying administration, investment and insurance fees, which means you could be paying more than you need to and losing money without even realising it. To compare super funds and see how they stack up, Moneysmart has some great tips on what to look for and sites to use here. Then decide if it’s right for you to have multiple super accounts or if you want to consolidate them.
Here are some things to keep in mind before consolidating any of your super accounts; take some time to consider where your future employer contributions will be paid; whether you might incur fees and costs; and whether you could lose insurance benefits from your existing insurer.
Okay, drum roll… our third tip is all about performance. Important in all relationships. In the way that interest rates go up and down, so too does the performance of super. Share markets around the globe can become volatile at times. So it’s important you know, and are comfortable with, your risk profile and the type of investment options you’ve selected in your super account.
A perfect example of this is 2020. According to the Australian Bureau of Statistics, due to the COVID-19; by March 2020, superannuation financial assets dropped $258.4 billion because investors in the share markets, like the rest of us, were uncertain of what the future would hold. By the end of June, there was a partial recovery of $130.2 billion, as investors got a clearer picture of how the pandemic was impacting our world. 4
To break it down a little more, a high-growth option can fluctuate in the short term and is usually riskier, but it can potentially provide higher returns over the long term. Safer options, like a conservative or cash fund, are lower risk, provide potentially lower returns and have a shorter recommended investment term when compared with riskier investment options.
Superannuation is a long-term investment, so it’s worth assessing your risk level and reviewing your investment options every now and then to make sure you’re still happy with your selection and how your super is performing.
Your top seven super no-brainers:
- Keep your tax file number handy at all times. For work, for the ATO, for life.
- Think about whether you need or want a new super account when you move to a new employer. Decide which account you want your employer superannuation contributions to be paid into and give your relevant super account details to that new employer.
- Check the ATO for any unclaimed superannuation.
- Review your super accounts and assess if you want or need multiple accounts, or if you want to consolidate them. Remember: you should consider where your future employer super contributions will be paid into, the fees and charges you may incur when consolidating and the risk of losing any existing insurances.
- Earning up to $54,837 p.a. in the 20/21 financial year? You may also be entitled to a government co-contribution of up to $500 each. The amount of the government super co-contribution will depend on a person’s income (inclusive of employer super contribution at 9.5% p.a.) and the amount of additional super contribution the person makes. The income threshold changes as of 1 July 2021 to $56,112. Check out the ATO website for more info and eligibility. The ATO also has a co-contribution calculator.
- Assess your risk profile regularly to make sure you are still comfortable with the investment options you have selected.
- Assess your financial position and review your needs, objectives and requirements for retirement. Once you know that, you can review the super contributions made to your super account and decide if you want to make additional contributions. Just make sure you’ve checked the cap limits for contributions into superannuation.
When in doubt or if you need assistance, consider speaking to a financial adviser or your accountant before making any changes to your super.
Did you know we can help you get started? Call an ING super specialist on 133 464 between 8am and 8pm Monday to Friday (Sydney time) to find out more.
- ATO (Last modified:18 Mar 2021), Lost and unclaimed super by postcode https://www.ato.gov.au/about-ato/research-and-statistics/in-detail/super-statistics/super-accounts-data/lost-and-unclaimed-super-by-postcode/
- Searching for lost super https://www.ato.gov.au/forms/searching-for-lost-super/
- Impacts of COVID-19 on superannuation funds https://www.abs.gov.au/articles/impacts-covid-19-superannuation-funds
- ATO (last modified 18 Mar 2021) figures to June 2020: 27% of individuals have 2 or more super fund accounts. https://www.ato.gov.au/About-ATO/Research-and-statistics/In-detail/Super-statistics/Super-accounts-data/Multiple-super-accounts-data/
- Using the Moneysmart super calculation and with assumption based on: 20-year-old with an annual $30K salary (before tax and super), retiring at 67, with an existing super balance of $10,000 balance, employer superannuation rate at 9.5% super at the start but will increase by 0.5% from 1 July 2021 until the superannuation guarantee rate reaches and stays at 12% from 1 July 2025 onwards, making additional concessional contributions of $25 a week. It is assumed there are no withdrawals made from the superannuation account and the employer and voluntary contributions will increase with inflation; also the total contributions are before tax contribution and do not exceed the concessional contribution cap, with the tax on these before tax contributions set at 15%. Based on ASIC’s default parameters which include by are not limited to an admin fee of $74 p.a., no contribution fees and indirect costs ratio of 0% insurance premium of $214 p.a. (which will increase with inflation each year) and default investment option (with return rate of 7.5% p.a., tax on earnings at 7% p.a. and investment fees at 0.85% p.a.).All figures are rounded (to nearest thousand) and in today’s dollars adjusting for inflation at 2.5% p.a. and additional rise in living standards at 1.5% p.a. These examples are for illustration purposes only and are not guaranteed. Actual outcomes may differ. Investments may go up or down. All ASIC’s assumptions on its calculator are available on its website.
The information is current as at publication. Any advice on this website does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. ING Living Super (which is part of the ING Superannuation Fund ABN 13 355 603 448) is issued by Diversa Trustees Limited ABN 49 006 421 638, AFSL 235153 RSE L0000635.
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The information is current as at publication. Any advice on this website does not take into account your objectives, financial situation or needs and you should consider whether it is appropriate for you. Deposit products, savings products, credit card and home loan products are issued by ING, a business name of ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823. ING Living Super (which is part of the ING Superannuation Fund ABN 13 355 603 448) is issued by Diversa Trustees Limited ABN 49 006 421 638, AFSL 235153 RSE L0000635. The insurance cover offered by ING Living Super is provided by Metlife Insurance Limited ABN 75 004 274 882, AFSL 238096. ING Insurance is issued by Auto & General Insurance Company Limited (AGIC) ABN 42 111 586 353 AFSL Licence No 285571 as insurer. It is distributed by Auto & General Services Pty Ltd (AGS) ABN 61 003 617 909 AFSL 241411 and by ING as an Authorised Representative AR 1247634 of AGS. All applications for credit are subject to ING's credit approval criteria, and fees and charges apply. You should consider the relevant Product Disclosure Statement, Terms and Conditions, Fees and Limits Schedule, Financial Services Guide, Key Facts Sheet and Credit Guide available at ing.com.au when deciding whether to acquire, or to continue to hold, a product. Before interacting with us via our social media platforms, please take a minute to familiarise yourself with our Social Media User Terms https://www.ing.com.au/pdf/Social_Media_User_Terms.pdf.