Super fund statement guide: what to check to grow your wealth

Annual superannuation statements arrive soon, and checking their key elements can have a huge positive impact on your retirement.

Super statements in your inbox should always be read. Picture: iStock

Superannuation fund annual statements are more likely to arrive in email inboxes rather than traditional letterboxes nowadays, so it’s easier for members to miss or ignore them.

However, the simple process of checking your super statement could easily deliver you tens of thousands of extra dollars later in life.

Australian Retirement Trust says only one in three members actually open their annual statements, despite two thirds of people not feeling their super is in a good position for their age.

It’s easy to forecast your future retirement balance, whatever your age. Several super funds include retirement projections in their statements, many have online calculators to help do this, while Moneysmart.gov.au has an independent superannuation calculator.

Moneysmart’s calculator shows an average 40-year-old with $200,000 in super could grow it to $437,000 by age 65, but if they shave 0.25 per cent off fees and increase annual investment returns by 2 per cent, their balance balloons to $640,000.

Australian Retirement Trust’s Anne Fuchs. Picture: Ben Symons/The Photo Pitch

“While it might not be cash in your pocket now, it will be in the future,” says ART’s executive general manager for advice, guidance and education, Anne Fuchs.

JUST OPEN IT

Step one in checking your super statement is to actually do it.

“My first call to action is ‘open the email’,” Fuchs says.

“If you only got your bank statement once a year showing how much is in your bank account, would you open it? You probably would, so apply the same mindset, because it is your money.”

“Check what is my balance, how is it invested, do I have the right amount of insurance? What fees am I paying?”

The younger you do this, the better.

“It’s like there’s no point putting on sunscreen in your 50s,” Fuchs says. “We all know the power of compounding interest, but compounding interest works like sunscreen in your 20s. That’s when you really get the kicker.”

INSURANCE

Millions of Australians have life insurance in their super – usually term life, disability and income protection cover.

Many are underinsured, while others pay too much because they did not review their cover as their debts reduced and children finished school.

Financial strategist Theo Marinis checks his own super twice a year – once around the September statement season, and also early in the new year – and says insurance should be reviewed at this time.

“Has your income gone up and do you have to increase income protection insurance?” he says.

FOCUS ON FEES

Marinis says fund members should be paying a maximum of 1 per cent in fees on their overall super balance.

Check more than just the annual administration fees, he says. “A lot of fees are in investment charges so look carefully at that. You have to look for them towards the back of the statement, in the last couple of pages of the report under ‘other costs and charges’.”

TIME TO REBALANCE?

Many people’s super funds, particularly retail funds, invest across different fund managers and investment types rather than simply a vanilla “balanced”, “conservative” or “high growth” portfolio.

If this is you, examine the performance of the individual assets or investment choices within your overall portfolio.

“Check that your asset allocation is still in line with your risk profile,” Marinis says.

“If it’s moved, perhaps rebalance.”

This means buying more units or investments that have done badly, and selling some of the top performers, to return your asset mix to its longer-term targets. “This is the opposite of what people want to do – they want to get rid of the rubbish and buy more of the other stuff,” Marinis says.

“Don’t get emotionally involved. Your super has to be on train tracks and you don’t veer from them.”

PERFORMANCE CHECK

Marinis says if your super investments have had a poor year, it is important to stick to your long-term strategy.

“When you panic, you make mistakes,” he says.

Fuchs says “no Australian ever should be switching based on what they have seen on past performance over one year, certainly not without financial advice”.

There are several important things to check on your super statement. Picture: iStock

SIX KEY THINGS TO CHECK

• Your current balance.

• Projections showing your estimated future balance and retirement income.

• Your life insurance cover and premiums.

• The investment mix, and whether it reflects your risk tolerance and age.

• Annual management fees and investment fees.

• Are your personal details and insurance beneficiaries correct?

Originally published as Super fund statement guide: what to check to grow your wealth