How to choose the best super fund for you
Choosing a superfund isn’t something you should do a coin toss over. If you pick the wrong fund that doesn’t suit your needs and lifestyle, you will end up regretting your choice. The right fund, however, will set you up for a much more comfortable retirement.
1. Check if you can choose your fund
Most employees are able to choose their own super fund for their employer’s super contributions. However, some people may not have this choice as they are covered by industrial agreements and are members of defined benefit funds.
You should be able to check with your employer or the Australian Taxation Office to see if you’re allowed to choose your own super fund.
2. Comparing
When deciding which super fund is right for you, make sure you look out for the following:
- Fees – the lower, the better
- Investment options – make sure that you are comfortable with the risk involved. A diverse fund is usually better positioned than ones who only invest in a couple of things.
- Extra benefits
- Performance – choose a fund that’s done well over the last five year’s not just in 2014.
- Insurance
- Service – call your potential fund or browse their website to see what services they offer
3. Consolidate, unless…
In most cases, consolidating your super makes sense. After all, you’re putting all your money into the same place and spending less on fees for services you may never use for multiple funds.
However, before you consolidate or change super funds, you should check to see if you will get the same death, total permanent and disability or income protection cover that you had in your last fund. This is especially important for over 60s and anyone with a pre-existing medical condition.
You should also check you won’t lose any important benefits by leaving a fund.
Seek financial advice with a licensed advisor before you make any changes, as they will be able to provide you with a cost-effective analysis based on your individual needs, financial and retirement goals.
4. Why change?
Knowing why you want to change will help you compare and make a better decision.
Reasons you might want to change funds may include:
- Reducing fees
- Investing in a fund with better services
- Getting out of a fund that’s performed badly over the last five years compared to funds that have a similar asset allocation
You want to be with your super fund for a long time, so ask lots of questions and be prepared to do research before you sign up.
Related links:
4 common retirement planning mistakes to avoid
Great ways to make money after you retire
How to avoid running out of money when you retire