Super warning: the big cost of not checking your annual statement
Australians are throwing away up to $125,000 in retirement savings by ignoring the most important financial document of the year.
It’s been described as one of the most important financial documents of the year, and yet a surprising number of people fail to look at it, potentially costing them more than $100,000.
It’s superannuation statement season, with letters being sent to members across the country detailing performance and fees.
Super specialists say beyond the two key statement staples – annual fees and investment returns – there are several other items and warning signs that fund members should understand.
Most major super funds send their statements to members during September and October.
AMP Super’s director of customer solutions, Julie Slapp, said it was “the most important document of the year”.
However, one in five Australians check their super once every few years or never at all, a new Canstar survey of 3000 people has found.
Canstar also analysed super fund performance and found the difference between being in an average fund and a top performer could equate to an extra $125,000 at retirement for a 30-year-old today. For a 40-year-old, the difference could be $91,000, and $49,000 for today’s 50-year-olds.
AMP Super’s Ms Slapp said a 30-minute check today could transform your retirement later.
Here’s what to focus on and when to get worried.
Contributions
Is your employer actually paying you your super entitlements, and paying you the correct amount?
Ms Slapp said compulsory employer super payments for 2024-25 were 11.5 per cent, before it increased to 12 per cent on July 1 this year.
“If anything looks off, check your transaction history or contact your fund,” she said.
Ms Slapp said if you spotted missing months or quarters, “act fast, raise it with payroll or the ATO”.
Fees
How much is too much when it comes to fees? Experts often say anything above 1 per cent of your balance per year in total fees is too high, although there may be exceptions for some high-performing funds.
Count the total fees, including administration fees (easily found on your statement), investment fees (not easily found and often towards the back of the statement), advice fees, transaction fees and other charges.
AJ Financial Planning founder Alex Jamieson recommends checking if your fees are appropriate, and adds the ATO portal on my.gov.au could be a good starting point.
“You can log into the ATO and select super, information and YourSuper Comparison,” he said.
This ATO comparison function shows total fees payable in dollar terms based on your personal super balance, making it easy to compare what your statement says with other fee options on the market. Some popular funds charge twice as much as others.
Investment returns
Returns on your super investments will be driven by how your nest egg is allocated.
“If you are in a balanced investment option and have 30 years until you retire, you will make a lot more by considering if you should select a higher risk investment option,” Mr Jamieson said.
“A balanced fund over five years did 6.82 per cent compared with a high-growth fund at 8.04 per cent, as an example,” he said.
And don’t simply focus on the past year’s returns. Canstar data insights director Sally Tindall said it was wise to look further back.
“You want to compare your fund with the top performers over the last five years, if not more,” she said.
“While past performance is never a guarantee of how a fund will perform in the year ahead, it can help guide your decision-making.”
Ms Slapp suggested comparing five-year and 10-year returns. The ATO’s YourSuper comparison tool compares 10-year returns.
Insurance
A majority of Australians pay for life insurance, total and permanent disability insurance and income protection insurance through their super fund.
As people get older, the monthly deductions for these can climb sharply, so it is worth understanding how much it is costing you and whether extra contributions should be made to top up your balance. Your annual statement will detail what insurance premiums you paid during 2024-25.
“Check your insurances to make sure you’re covered for what you need,” Ms Tindall said.
Ms Slapp said insurance cover should reflect your current circumstances.
She said having an “insurance mismatch” could be costly on multiple fronts: “paying for cover that isn’t needed, or having no cover when there are dependants or debt”.
Beneficiaries
Who gets your life insurance and your superannuation when you die? This will be clearly written on your super statements.
Ms Slapp said check if you had made a beneficiary nomination and whether it was still valid.
“Some members have been caught out by nominations that expire after three years,” she said.
Projections
Some super fund statements show a projection for your super balance at retirement and forecast retirement income. The Association of Superannuation Funds of Australia says a single person needs a balance at age 67 of $595,000 to lead a comfortable retirement, while a couple requires $690,000 combined.
“A retirement income projection shows what your current balance could mean as income in retirement,” Ms Slapp said.
“If it looks low, consider adjusting contributions, investment mix, retirement age, or adding a lifetime income stream,” she said.
More Coverage
To join the conversation, please log in. Don't have an account? Register
Join the conversation, you are commenting as Logout