Listen: Seven Network's finance editor Gemma Acton explains recent changes around superannuation to Sam Robinson on Hope Breakfast
It was easy to miss the Federal Government’s recent changes to superannuation, so here’s a helpful explainer.
The conversation around superannuation has been changing in recent years. I recall not learning a thing about super in school, which is a shame, because it has left myself and my fellow millennials a little in the dark. However, the Australian Government has made some recent changes which will help those who are younger set themselves up for a stronger retirement.
Gemma Acton, finance editor for the Seven Network, joined Hope Breakfast to explain why it’s so important to consider your superannuation as early as entering the workforce for the first time.
“If you start off on the right foot, with your money in a good fund that is earning decent money every year, and all your money is together so you’re only paying one set of fees, it can add up to a quite a lot by the end of your working life,” Gemma said.
“If your money is spread out over a number of funds, paying several sets of fees, or you’re with a fund manager who takes too much of your return through their fees, then you could end up with substantially less. We’re talking tens of thousands of dollars by the end of your working life.”
The Government has enacted “stapling”, which means that when you first open a super account it will follow you around when you change jobs.
Assisting with this, the Government has enacted “stapling”, which means that when you first open a super account it will follow you around when you change jobs. Previously, many Australians have joined a new super fund with each new employer, which creates multiple fees. Gemma specified, however, that this doesn’t mean you can’t switch super funds, should you choose to.
“You’re not stuck with it, because you can, any day of the week, pick up the phone and move to whatever fund you like, but you just need to remember to do that. It’s a good development, but keep an eye on how that super fund you are first stapled to is performing.”
Gemma assured Hope Breakfast listeners it’s never too late to ensure you’re with a good super fund, and the most important thing to watch is fees.
“Fees are really important,” she said.
“Over time it can really add up. Broadly speaking, industry funds have lower fees than retail funds.
“This was brought out clearly in the Royal Commission. We saw on the whole super members who belonged to bank and insurance retail funds did a lot worse over time than industry funds. That’s a really easy thing to just check that you are with a fund that has low fees.
“It’s just giving money away if you’re paying higher fees.”
Hear more advice around superannuation with Gemma Acton in the player above.