Disgruntled superannuation members can easily switch funds

SUPERANNUATION funds have come under fire at the Royal Commission for ripping off customers, who are now looking to jump ship. But experts say there are a few things to consider first.

SUPERANNUATION funds have come under fire in week one of the Royal Commission and there’s more pain to come in week two.

For frustrated members who have been outraged with the tales of rorts, blatant gouging and the collection of lucrative commissions, it may be time to switch.

But before you jump ship experts warn there are a few things to consider.

SUPER FUNDS: HOW TO AVOID SUPER FUND RIP-OFFS

AUSTRALIANS GOUGED BY UNNECCESSARY SUPERANNUATION FEES

1. BE ENGAGED

The superannuation industry is worth a whopping $2.6 billion dollars and with dozens of funds available there’s plenty of choice for members.

The Association of Superannuation Fund of Australia’s chief executive officer, Dr Martin Fahy, said the first step is to check up the status of your existing fund including fees, charges and balance before taking any action.

“People need to be more engaged with their super and if you’ve got concerns with your super get out your statements and fund letters,’’ he said.
Also pay attention to what investment option you are in because this will significantly impact your returns.

2. FEES AND CHARGES

Dr Fahy suggests members ask their friends and family what fees and charges they are being hit with so they can work out if they are paying too much.

“Compare your fees and then ring your funds,’’ he said.

“If you feel you are not getting a good deal then don’t be afraid to move.”

He said fees can range up to 3 per cent but members need to check what they are being charged because fees vary across super funds.

“For most consumers fees will range from 0.5 per cent to 1.5 per cent, dependent on product features such as the nature of underlying investments,’’ Dr Fahy said.

“On average the percentage based fee amount for consumers in MySuper products is 0.81 per cent per annum.”

There’s many different fees that apply including administration and investment fees and insurance costs, so if you’re confused ring up your fund and ask for help.

Switching super funds may help you receive better returns while paying lower fees.

3. PERFORMANCE

One of the nation’s largest super funds, Hostplus has more than 1.1 million members and manages $34 billion.

The fund’s group executive of retirement solutions and advice Paul Watson said it’s important to also weigh up how your fund has performed in recent years.

“General considerations include the long-term net performance of an investment option,’’ he said.

“Staying with one top-performing fund over the long-term could mean the difference in tens of thousands of dollars.”

The fund recently returned the best of all “My Super” balanced investment options for the last financial year at 12.5 per cent.

But industry experts say10-year performance is often a better indicator of how a fund has really fared.

Past performance however is not an indicator of future performance.

4. SWITCHING/CONSOLIDATING

There’s plenty of online sites including Canstar, Chant West, Super Ratings, Morningstar and RateCity that help customers compare super funds.

Mr Watson said it can be a relatively smooth process.

“Setting up a new super account and consolidating your other accounts across can be done over a cup of coffee and could be the most valuable 10 minutes of your life,’’ he said.

“You can either roll over your accounts online through a few simple clicks or call your super fund directly over the phone.”

Customers can visit the free MyGov website to retrieve lost or unclaimed super.

But those picking a new fund should get them to do all the dirty work for you and switch you across.

This will involve some paperwork but will likely be worth it in the long run.

@sophieelsworth