Before I worked in wealth for one of the major super funds, I didn’t really understand the importance of super.
It was just that thing for which you had multiple accounts and you got a statement in the mail at the end of the year. Usually all it would show was that my balance was depleted.
Sometimes, my fund would give me my money back through account protection, where low-balance accounts (below $1,000.00) were protected from being eaten up by fees. This stopped being enforced by many super funds a couple of years ago.
So why the hell is super all that important anyway? Well really, the whole purpose of super is to try and have some funds available when you retire. This will then minimise the reliance on the aged pension pittance (note: these rates are fortnightly) and improve your living standard.
That’s why it is pretty difficult to get take your super out early unless you meet certain criteria. You can’t easily take it out because you’re in some temporary trouble. Please see the criteria link to see if you’re in trouble and would like to see if you qualify.
Rolling your super over into one fund
Unlike bank accounts and such, it actually matters if your super is in many places. The fees can be quite hefty and you don’t want to lose your money. Although you cannot access it today, this is still your money and you’ll want to access as much money as you can when you meet a condition of release.
The important thing will be to ensure that you pick a super fund and investment options which are in line with your risk profile and investment needs. Although there are general guidelines, if this all confuses you, I would recommend seeing a fee-for-service financial planner. Just make sure that you pay all of your adviser service fees upfront as a lump sum only.
Many banks and super funds have a free financial advising service over the phone that can help you figure out your risk profile for free if you’re an existing customer. Just be clear with them if you only want to find out your risk profile.
This will help you pick which investment within your fund to put your money into. You should also check up on the fees of each of your funds if you have many and pick based on that and performance. Again, if this sounds too annoying or complicated, please just see a financial planner/adviser.
Remember that most funds will allow you to roll your account over just by having your TFN. It’s not as much effort as before.
“But I’m young, and I don’t care”
The answer is… I’m young too, and for now – you don’t care. You will care later though. Remember that you employer pays 9.5% worth of your salary into your super and they wouldn’t do that if they didn’t have to. They have to because the government has realised that it is unsustainable for the whole population to rely on the pension. Plus, do you really want to be in dire straits after working your whole life? The pension is not easy to live on if you’re a foodie like me; or if you want a comfortable life in your retirement.
I’ll do a more technical post later about super contribution caps and the such, but here’s a fantastic government resource about super from the ATO. I’ll also post the links to “Finance Favourites” on the side.
Note: I will do a separate post about insurance, including insurances within super (just to make it even more confusing).