Are you someone who receives their superannuation statement, glances at the balance, and then puts it away?
Your statement contains important information about your financial security. Understanding what’s in your super statement and acting on it if you need to, could make a difference of tens of thousands of dollars by retirement.
What Your Superannuation Statement Tells You
Super funds are required to send members an annual statement showing a detailed snapshot of their account. While layouts differ, most include five key sections:
- ·Your Account Balance. The total amount in your fund as of 30 June. This reflects contributions, investment returns, and fees over the past financial year.
- ·Contributions Made. Lists employer contributions (Super Guarantee), salary sacrifice, and any personal contributions. Checking this ensures your employer is paying the correct amount and on time.
- ·Investment Performance. Shows how your chosen investment option (Balanced, Growth, Conservative, etc.) performed. You can compare this to similar funds or benchmark indexes.
- ·Fees and Costs. Itemises administration, investment management, and insurance fees. Small differences here can erode your balance over time.
- ·Insurance Cover. Many super funds include default life, TPD (total and permanent disability), and sometimes income protection insurance. This section outlines the premiums and coverage levels.
Why Reading It Matters
Your super statement is a financial health check for your future. Reviewing it each year helps you:
- ·Verify employer payments: The ATO receives thousands of complaints annually from workers whose super contributions were missed or underpaid.
- ·Monitor investment growth: Understanding how your fund performs compared to others can help you decide whether it’s time to switch options or providers.
- ·Assess insurance needs: Default insurance inside super is convenient, but not always sufficient or necessary. You might be paying for cover you don’t need.
- ·Track your long-term progress: Your statement shows projections of your future balance at retirement age. These can help you gauge whether you’re on track to meet your income goals.
The Impact of Inattention
Consider this: a 40-year-old earning $100,000 per year who doesn’t review their super for the next 20 years could lose over $70,000 in potential returns simply by staying in a poorly performing fund.
Even a 0.5% difference in annual returns can compound dramatically over time.
Example
Average Return
Annual Fee
Balance At 65
Fund A
(higher Performer)
7%
0.8%
$950,000
Fund B
(Lower Performer)
6.5%
1.2%
$880,000
That’s a $70,000 gap just by not paying attention.
What to Check in Your Statement
Here’s a quick checklist for reviewing your end-of-year statement effectively:
- ·Employer Contributions: Confirm that your employer is up to date with payments.
- ·Investment Option: Is your risk profile appropriate for your age and goals? Younger investors might opt for higher-growth options, while those nearing retirement may prefer stability.
- ·Fees: Compare total fees to industry averages. The ATO’s YourSuper Comparison Tool makes this simple.
- ·Insurance: Review whether the level of cover is right and whether you’re paying duplicate premiums across multiple funds.
- ·Beneficiaries: Ensure your nominated beneficiaries are up to date. This is one of the most overlooked yet crucial sections.
- ·Performance: Look at the past five-year return, not just one year. A single down year doesn’t tell the whole story.
Are you receiving multiple statements?
If you receive multiple super statements from different employers or funds, consider consolidating them into one. Having a single super account can:
- ·Reduce duplicated fees and insurance premiums.
- ·Simplify tracking contributions and performance.
- ·Make estate planning easier.
Before consolidating, always check you’re not losing valuable insurance or benefit entitlements.
At Cashflow Financial, we help clients take control of their superannuation with tailored advice from reviewing fund performance and insurance to optimising contributions and tax strategies. Your super is a cornerstone of your future wealth, so give the statements more than a glance. If you need advice or questions, contactCashflow Financial today. We are here to help.Small changes now can make a big difference to your financial future.