Every Australian worker or business owner must have (or should have) a superannuation fund to help cover them during retirement, as well as offering certain insurance policies in the mix in the event of an accident, loss of income or even death.
While in theory super funds sound like a very good idea, they’re not infallible and not without their problems. There is no absolute guarantee of a healthy nest egg once a super fund matures and you retire from working life. That’s the idea in concept, but super funds don’t always produce a colourful bed of roses.
You’re Often Dealing With Insurance Companies
When you think about superannuation, you envision a team of business professionals making sound investments with your money that lead to growth.
This is true, but it’s only part of the super equation.
Super funds include insurances like:
- Income Protection
- Death Benefits
There is more to superannuation than just monetary investments. These funds are also about covering you in the event that you can no longer work due to injury, or worse. Because of the involvement of insurance companies, you may encounter a situation where you need to make a claim against your insurance.
If you’re having issues with your super fund, such as being unable to work and wishing to make a TPD claim, then superannuation dispute lawyers are there to help.
You’re far better off having a professional file the claim for you, as a positive result is more guaranteed than if you go it alone. Many lawyers who deal in super fund disputes will work on a “no win no fee” basis, so you really have nothing to risk and everything to gain.
Too Many Super Accounts
Many Australians jump from job to job, and this often means they end up with multiple super accounts, when different employers deal with different super funds.
Estimates place the figure at 10 million unintended multiple super accounts in Australia.
It’s generally a simple enough process to have funds rolled over from one account to the next, but a lot of people simply don’t bother.
This often results in lost super that then needs to be searched, found and claimed. Sometimes small super funds seem to fall through the cracks into some void where they simply disappear. You search for them, but they are apparently AWOL, never to be seen or heard from again.
Generally these funds with small amounts of money in them eventually dwindle away to nothing due to multiple account keeping and admin fees.
Australians are far better off keeping all their super in just the one fund. That way you never need to go searching for lost super, and it’s far easier to manage and keep tabs on just the one super fund, rather than half a dozen different accounts with different funds.
Some Super Funds Under Perform
Basically the way super funds grow your money rather than simply storing it like a savings account is through a variety of investments, some of which are shares. However, not all super funds are created equal.
Just like some share traders don’t fare well in the markets, the same goes for superannuation funds. Some companies perform better than others, and some investments turn out more profitable than other investments.
In reality, super funds cannot guarantee profit and growth on your account, as any form of investment is speculative and somewhat of a gamble. Even those “safe and secure” blue chip shares can take a nosedive on occasion.
Those Pesky Super Account Fees
It was mentioned earlier in this post that some small super accounts simply vanish due to being eaten away by admin and account keeping fees.
All super funds come with fees that subtract from you and your employer’s contributions. It’s no different to the big banks. Some super funds charge a plethora of fees, so this is something worth looking into before choosing a fund that’s right for you.
You don’t have to automatically go with the super fund your employer prefers. You have the right to choose. It’s also wise to stick with the one fund if it’s performing well, rather than have your valuable super spread between multiple accounts.