Investing in Superannuation

Why is investing in superannuation early important?

Superannuation isn’t always on top of the agenda when you’re in your 20s and 30s. More interesting financial goals may include trying to stay on top of bills or get out of uni debt, afford trips overseas, saving enough for a deposit on a house, or maybe even dabbling in the world of high risk high return cryptocurrency. While it may be hard to justify putting your hard earned cash into a fund that you won’t have access to for years, the reality is that investing in superannuation in a smart way, will set you up for a comfortable retirement when you’re ready to stop working.

The benefits of investing in superannuation

Superannuation is one of the best long term investment options in Australia. This is primarily due to the fact that the Australian Government has lower tax rates for super fund contributions – usually at a maximum of 15%. Like any investment, the sooner you invest in your superannuation, the more the fund will accumulate over time, leaving you with a larger pot to live from once you’ve retired.

How much super should I have by age 30, 40, 50 and 60?

The amount of super you should have saved based on your age depends on what type of lifestyle you want to live once you reach retirement. That is, a modest lifestyle that is higher than the Aged Pension and allows for all the basics, or a comfortable lifestyle that allows for a higher standard of living including extras. Your ideal amount can also change based on personal financial factors like outstanding debts, or other savings or investments you may have.

In order to gauge how much you should have in your super balance, the Association of Superannuation Funds of Australia (ASFA) has developed a handy tool that allows individuals to estimate an ideal super balance needed to reach the ASFA Comfortable Standard balance by age 67. The below outlines the ideal super balances for individuals aged 30, 40, 50, and 60.

Age Ideal Superannuation Balance
30 $61,000
40 $154,000
50 $271,000
60 $430,000

What are voluntary contributions?

If you find that your balance is lower than the recommended amount, or simply wish to make more contributions to your fund, you may consider investing in voluntary superannuation contributions. Voluntary contributions is money you put into your super fund on your own, from your after tax income. Making such contributions can not only boost your super balance, but can result in tax savings and Government bonuses or rewards in special circumstances. Most major superannuation funds allow for voluntary contributions. Voluntary contributions are capped at $27,500 for all individuals regardless of age. Major funds such as PSSap, GESB, Australian Super, Rest Super, ANZ Smart Choice, and Qantas Super all allow for voluntary contributions through payroll deductions, direct debit, or BPay, and have similar policies. If you want to contribute on behalf of a spouse, most companies require you to create an account on their super scheme, apart from Australian Super which allows contributions from other funds.

Superannuation offers a cost effective and sound long term investment that will hel-p ensure a comfortable retirement once you’re ready to stop working. Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU!

Speak To An Advisor

Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU

* all fields required
How can we help? *

GESB Super VS AustralianSuper

GESB Super vs AustralianSuper

AustralianSuper and GESB Super are two very popular super funds in Western Australia – but do you know how they differ, or which could be the better fit for you? To make it easy, we’ve compared the key features of both funds side by side. 

AustralianSuper is the largest superannuation fund in Australia, and is a not-for-profit fund with an industry membership base. Membership is open to anyone within Australia.

GESB Super manages super savings of current and former WA public sector employees. GESB Super is open to government employees and only accepts employer contributions from WA public sector employers.

GESB Super vs AustralianSuper: How do fees compare?

When comparing AustralianSuper and GESB Super fees, Australian Super has lower annual fees , with a 0.67% investment based fee, compared to GESB percentage based fees of 0.69%. However, AustralianSuper has a flat fee of $117, whilst GESB Super has a flat fee of $66.

AustralianSuper vs GESB Super: How does performance compare?

AustralianSuper GESB Super
Type of fund Industry super fund not linked to any specific industry. Only open to WA Government Employees.
Members 2.3 million 240K
Management Not self managed, regulated by APRA. Not self managed, regulated by APRA.
Fees (Based on 50K) $452.00 AUD $411.00 AUD
Asset Allocation (Default Fund) AustralianSuper Balanced:
International Shares - 31%
Australian Shares - 21%
Infrastructure - 13.5%
My GESB Super Plan:
International Shares - 32%
Australian Shares - 27%
Investment Grade Bonds - 11%
Performance (Default Fund) AustralianSuper Balanced:
1 Year: 18.81%
3 Year: 9.27%
5 Year: 10.04%
My GESB Super Plan:
1 Year: 17.90%
3 Year: 7.12%
5 Year: 7.55%
Review my Super Ranking Ranked 3rd by performance over the past 12 months out of 45 funds. Has not made top performing funds lists.

How does AustralianSuper and GESB Super insurance compare?

Insurance is also an important factor to consider when looking at superannuation options, as some funds may also provide insurance cover – such as life cover and TPD insurance.  Insurance fees will affect super balance, so ensuring you’re happy with the deal you have is vital. Based on ratings from Omnilife, Australian super received an insurance rating of 66/100, whilst GESB Super has received a rating of 60/100 for its insurance options. 

Interested in seeing how AustralianSuper and GESB Super compared to other popular Australian funds? Review My Super provides valuable insights on the best and worst performing Australian super funds, so that you can make informed decisions on where you invest your money.

Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU!

Speak To An Advisor

Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU

* all fields required
How can we help? *

What is an APRA fund?

APRA Funds Explained

Whether you’re a superannuation novice, or a seasoned financial pro, chances are you’ve heard the words APRA mentioned when talking about finance in Australia. But what exactly does the APRA do, what do they have to do with your superannuation fund, and why should you care? Read on to discover all you need to know about this integral Australian financial institution

What does APRA stand for?

APRA stands for Australian Prudential Regulation Authority. It is a Government body that was established in 1998 after the Wallis Inquiry. This inquiry mandated that all existing prudential regulation be undertaken by one single Government body instead of multiple agencies. Because of this ruling, the APRA was created.

What does the APRA do?

APRA’s main objective is to regulate the Australian financial industry, ensuring the prudent management of all financial institutions within the country. Put simply, the APRA makes sure that financial institutions look after the interests of everyday people (beneficiaries) and their money. It does this by regulating financial entities in accordance with the laws of the Commonwealth. Financial entities under regulation of the APRA include:

· Some superannuation funds

· Banks

· Credit unions

· Building societies

· Insurance companies

· Private health insurance companies.

Does APRA regulate self managed funds?

The superannuation industry is one of the institutions regulated by APRA in Australia. APRA regulated fund types include industry super funds, corporate super funds, and company super funds. Funds that are registered with APRA are referred to as registrable superannuation entities. A major benefit of having an APRA-regulated super fund is the peace of mind associated with not being responsible for fund compliance issues, as well as legal and accounting costs associated with meeting ATO compliance.

Does APRA regulate self managed funds?

Self-managed super funds (SMSF) on the other hand, are not regulated by APRA, but by the Australian Tax Office. There are numerous benefits to having a SMSF, such as greater flexibility, tax efficiency, and more control over where your money is invested. However, it’s the fund trustee’s personal responsibility to adhere to ATO regulations and ensure the fund is compliant. This means staying on top of ever-changing regulations and making changes to your investments where necessary. As an example, in cases of fraud or theft, non-APRA

regulated funds cannot apply for Government compensation, with trustees needing to pursue compensation at their own expense. SMSFs are also not covered by the Australian Financial Complaints Authority (AFCA), where disputes involving registrable superannuation entities can be resolved free of charge.

What do SMSF trustees need to keep in mind regarding non-APRA membership?

Because SMSFs are not APRA regulated, trustees need to ensure that their funds remain compliant in an environment of ever-changing regulation. Failure to do so may result in actions such as:

· Administrative penalties

· Civil and criminal penalties

· Disqualification of a trustee

· Freezing of assets.

If you do decide to manage your own super fund, it is essential to stay up to date with superannuation compliance in Australia and make changes accordingly.

Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU!

PSSap VS AustralianSuper

PSSap VS Australian Super

Australian Super and PSSap are two of the most popular super funds in Australia – but do you know how they differ, or which could be the better fit for you? To make it easy, we’ve compared the key features of both funds side by side. 

Australian Super is the largest superannuation fund in Australia, and is a not-for-profit fund with an industry membership base. Membership is open to anyone within Australia. PSSap is a comparatively smaller fund in membership. This is because it’s open only to those working within the Australian public sector, or for other eligible employers. The Commonwealth Superannuation Corporation is the trustee of PSSap. 

Australian Super vs PSSap: How do fees compare?

When comparing Australian Super and PSSap fees, Australian Super has lower annual fees , with a 0.67% investment based fee, compared to PSSap percentage based fees of 1.15%.

Australian Super vs PSSap: How does performance compare?

Australian Super PSSap
Type of fund Industry super fund not linked to any specific industry. Default super fund for most Australian Government employees and for employees of other eligible employers.
Members 2.3 million 140K
Management Not self managed, regulated by APRA. Not self managed, regulated by APRA.
Fees (Based on 50K) $452.00 AUD $659.00 AUD
Asset Allocation (Default Fund) Australian Super Balanced:
International Shares - 31%
Australian Shares - 21%
Infrastructure - 13.5%
PSSap MySuper Balanced:
Equities - 47%
Alternatives - 19%
Fixed Interest - 18%
Performance (Default Fund) Australian Super Balanced:
1 Year: 18.81%
3 Year: 9.27%
5 Year: 10.04%
PSSap MySuper Balanced:
1 Year: 18.75%
3 Year: 7.87%
5 Year: 8.31%
Review my Super Ranking Ranked 3rd by performance over the past 12 months out of 45 funds. Has not made top performing funds lists.

Looking at performance of both default funds, Australian Super has delivered higher returns over short, medium, and long-term scenarios. However, PSSap’s high growth fund and conservative investment options still outperformed the median against Chant West’s median performance. 

In terms of high growth investment option returns,  Australian Super outperforms PSSap in all years bar the 3rd, where PSSap outperforms Australian super at 10.75% to 11.08%. While Australian Super performs better when comparing medium and aggressive funds, PSSap performed comparatively well with its conservative fund which is slightly better than the Australian super conservative option. 

How do Australian super vs PSSap insurance compare?

Insurance is also an important factor to consider when looking at superannuation options, as some funds may also provide insurance cover – such as life cover and TPD insurance.  Insurance fees will affect super balance, so ensuring you’re happy with the deal you have is vital. Based on ratings from Omnilife, Australian super received an insurance rating of 66/100, whilst PSSap has not received a rating for its insurance options. 

Interested in seeing how Australian Super and PSSap compared to other popular Australian funds? Review My Super provides valuable insights on the best and worst performing Australian super funds, so that you can make informed decisions on where you invest your money.

Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU!

Speak To An Advisor

Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU

* all fields required
How can we help? *

IOOF Rebrand to Insignia

IOOF becomes Insignia Financial

In October 2021, IOOF announced it would undergo a rebrand to become Insignia Financial as part of its transformation, following its recent acquisition of MLC.

Whilst the rebrand will involve a new brand image, name and logo, the company asserts that its underlying strategy will remain the same.

At the IOOF AGM on November 25th 2021, shareholders have overwhelmingly voted in favour of the company’s plan to rebrand as Insignia Financial. When asked to approve the rebrand at IOOF’s annual general meeting, 98.47 per cent of shareholders voted in favour of the resolution.

“Insignia will be the symbol for financial wellbeing in Australia,” the chairman said, noting that brands such as MLC, Bridges, Shadforth Financial Group and Godfrey Pembroke would be retained.

The rebrand is expected to cost between $2 million and $3 million, funded by the MLC acquisition budget approved by shareholders at the 2020 AGM.
See here for the CEO and Chairman’s address.

About Insignia Financial Rebrand

A strategic review was undertaken following the fallout of the Royal Commission on IOOF’s organisation and brand.
The new brand draws on the origins of IOOF and signifies the fusing of the IOOF and MLC organisations and aligns future goals.
It’s unclear at this stage whether, the rebrand will be just at Corporate level and if the IOOF and MLC super products will adopt the Insignia brand name or if the underlying investments and fees will change.

IOOF rebrand Insignia Logo

About MLC

Formerly the wealth arm of National Australia Bank. MLC was acquired by IOOF, following NAB’s decision to exit the wealth industry.
MLC still operates under it’s own brand. See our review of it’s Flagship super product MLC Masterkey.

MLC Super

About IOOF

IOOF, which stands for the Independent Order of Odd Fellows, was founded in 1846 and is one of Australia’s largest financial institutions. After the acquisition of MLC became one of Australia’s largest superannuation funds. See our Review of IOOF’s main Super products IOOF Personal Super and IOOF Pursuit Focus Personal Super.

IOOF Pursuit Focus Logo

Speak To An Advisor

Review My Super can review every Super Fund in Australia and can help you understand what YOUR money is doing for YOU

* all fields required
How can we help? *

Contributing to Super

Types Of Super Contributions

Super Guarantee (employer contributions):

The compulsory rate of super contributions that employers need to make to their employees super funds is known as the Super Guarantee. Currently, the standard super guarantee rate is 10.00% of your pre-tax salary and is slated to increase as follows:

Period Rate
Current 10.00%
1 July 2022 – 30 June 2023 10.50%
1 July 2023 – 30 June 2024 11.00%
1 July 2024 – 30 June 2025 11.50%
1 July 2025 – 30 June 2026 12.00%

Salary sacrifice:

Is contributing an additional amount (above your super guarantee) of your pre-tax salary into your super fund.

This is generally a tax effective strategy, as long as your marginal tax rate is higher than the 15% contributions tax.

For example, if you earn $60,000 per year (37% tax bracket) and you organise with your employer to salary sacrifice $1,000 into super, you will then save $370 income tax and pay $150 contributions tax- thus reducing your total tax exposure by $220.

You must make sure that you do not make more than $27,500 per year in concessional contributions. This includes your super guarantee, as any amount above $27,500 gets taxed at the highest marginal tax rate (45%).

 

Government Co-Contribution:

The government co-contribution is available to anyone earning less than $52,697 per year (before tax) with the full benefit of 50c for every $1 contributed (up to a maximum of $500) being available to those earning under $37,697 per year.

E.g. if you earn $35,000 for the financial year and you make an after tax contribution into your super during the same financial year of $1,000 then after you’ve completed your tax return the government will contribute $500 into your super fund. If you contributed $500 the co-contribution would be $250.

To see if you’re eligible for a government co-contribution please use the ATO’s Super Co-contribution Calculator

Spouse Contribution

If you’re spouse earns below $40,000 per year, then you may be eligible to claim up to a $540 tax offset for contribution into their fund.

 

Spouse contribution splitting

You can also split your employer super contributions with your spouse. However, contribution splitting can only be done after the end of a financial year. This needs to be organised through your super fund.

Next Steps:

Once you understand the different types of contributions and how they apply to you, it’s a good idea to put a plan in place and take action.

If you would like assistance with planning your super contributions, you may want to get super advice and discuss your options with an advisor.

Insurance In Super

Background

Most people will have Life, Total Permanent Disablement (T.P.D) cover and sometimes income protection (salary continuance) insurance in their super.

What most people don’t know is, that you don’t have to stick with this default cover. You can adjust your insurance cover amounts, to whatever amount is appropriate for your situation and you can cancel it altogether if you don’t need it.

Nearly all the super funds are not insurers. The insurance in super is insurance cover provided by an external insurer. You’re not obligated to be with this insurer. You can compare the wider market of insurers and select the insurer that’s providing the most suitable cover for your situation to be funded via your super.

 

What type of cover and how much cover should I have?

This really varies from person to person. Some people require a lot of cover and some people might not need any.

For example:

Someone with a mortgage, children and who is the main income earner for their family will generally require a lot more cover than a single person with no debts or financial dependents.

The single person if financially independent may still want to consider T.P.D and income protection to cover themselves in worst case scenarios. However, they may not need life cover and less T.P.D and income protection.

The thing that’s important to think about is, if something did happen to you how much cover would you need? It’s helpful to put yourself in the shoes of your potential future-self following a claimable event.

 

Situations to consider?

What if:

– you were to pass away how much cover would your family need?

– you became Permanently disabled how much would you need as a lump sum to support, you and your family?

– your income stopped today due to injury or illness, how long could you survive?

The answers to these questions are unique to everyone. It’s best to have a good think about how these apply to you.

 

Which Insurer should I be with?

Insurers specialise in different demographics of people such as occupation, age, gender, smoker status and medical history. So, it’s important to compare all the insurers to ensure you’re getting the best cover for your situation.

 

What to do next?

If you’re unsure about what amount and type of cover is appropriate for you or which insurer to be with then we recommend you seek advice. We can provide automated advice through the Digital Advice tool or contact us to book a consultation with a financial advisor.

Risk Profile

Risk Tolerance & Profile

A Risk Profile is used to classify individuals risk tolerance. This is determined by answering a series of questions in a risk profile questionnaire.

The questionnaire’s purpose is to determine the level of risk an individual is willing to take on, in order to achieve their desired return. Once your risk profile is known, it is used to determine the most appropriate asset allocation for your Superannuation or other investments. 

You can read more about risk and return here.

The main categories of risk profiles are as follows;

High Growth:

High growth investors are prepared to take higher risks for potentially greater returns. A high risk of capital loss is therefore to be expected.

HighGrowthChart

Growth:

The primary concern of growth investors is to accumulate assets over the medium to long term. A medium-high risk of capital loss is therefore expected.

Risk profile chart

Balanced:

For balanced investors, calculated risks are acceptable to achieve better returns. A medium risk of capital loss is therefore expected from time to time.

BalancedChart

Moderately Defensive:

Typically, moderately defensive investors seek to protect the wealth they have already accumulated. A medium-low risk of capital loss is therefore expected.

ModeratelyDefensiveChart

Defensive:

A defensive investor’s portfolio should be biased towards security of capital. A low risk of capital loss is therefore expected.

DefensiveChart

Secure:

A secure investor’s portfolio should not be exposed to fluctuations in the market, by remaining in stable investments such as cash. A very low risk of capital loss is therefore expected.

SecureChart

Next Steps:

If you’re unsure what profile you fall into and would like advice then please contact us to speak with an advisor.
If you understand your risk profile and are looking for advice on the best fund for you then you can get advice via our digital advice service or by contacting us to speak with an advisor.

Choosing a Super Fund

Why it matters:

Choosing a super fund is one of the biggest financial decisions of most people’s lives.

Unfortunately, there’s a huge difference in the fees and performance between the best and worst performing super funds.

In fact, for an Australian earning the average full-time income, the difference for their super balance between a fund with a return of 8.5% p.a. compared to a fund with a return of 4.5% p.a. works out to be over $478,000 after inflation over the course of their lifetime (age 25-65).

What to look for in a super fund:

Do they have suitable options consistent with your risk profile? 

Your risk profile is essentially the amount of risk you’re willing to take to achieve your desired return. Some funds have a very limited choice of investments. It’s generally a good idea to choose a fund with multiple options within your risk profile so you don’t have all your eggs in one basket.

 

How have the investment options consistent with your risk profile performed?

As illustrated above the performance of your fund has a huge impact on the funds you will have at your disposal during retirement. See if your fund is in the top 10.

 

What fees do they charge?

The fees that the fund charge also have a large impact on your retirement balance. Use our fee calculator to find out how much you’re paying in fees and how much you could save by switching to a lower cost fund.

 

Insurance within the fund?

Most Super funds will come with some amount of insurance cover. We always recommend assessing your insurance needs and comparing the wider market of insurers to ensure you have the most appropriate amount of cover and the best insurer for your situation.

 

Where to Start?

The best way to start is to do what you’re currently doing – some good research to boost your general understanding of super and what to look for. 

Once, you’ve developed a better understanding of super and you’re still unsure about which fund you should be with, then you should seek advice. You can do this automatically via our Digital Advice service or by contacting us to book a consultation with an adviser.

What is Super?

The Background

What is Super? This is a commonly thought, but not often asked, question. 

Superannuation is essentially a retirement savings scheme. It allows people to save for their retirement so that they can self-fund their retirement instead of relying entirely on the age pension. It works by contributing a part of your wage (10% minimum for employees) into an investment fund, which stays invested and grows until you retire. When you retire you can access these funds to replace your salary in order to pay for living expenses in retirement.

 

What Is My Super Invested In?

Within each investment option your funds are generally spread across a range of assets. The core assets are: Australian and international shares, property and infrastructure, Fixed interest and Cash. However, some investment options will be invested into just one asset class e.g. cash, Australian shares or Australian property.

 

What Type of Investment Option Should I Be In?

This depends on your individual circumstances and your risk tolerance for investments. Broadly speaking; shares, property & infrastructure are defined as growth assets whilst cash & fixed interest are defined as defensive assets. This is because over the long-term growth assets grow at a faster rate than defensive assets. However, the downside is they can be much more volatile in the short term.

 

Your Risk Profile

If you’re unsure as to whether to have more growth or defensive assets in your portfolio then you should assess your risk profile. This helps determine your risk tolerance for investments. In turn, this helps guide you to determine which type of investment option is best for you.

 

Choosing a Super Fund

If you understand the basics of super and what type of investment option you should be in, choosing a super fund is your next step.