Engage With Your Superannuation
Superannuation is important for retirement and for providing insurance cover. But here’s a stat that should make you sit up straight: more than one in four Australians can’t even name their own super fund. Not their balance. Not their investment option. Their fund. That’s according to research commissioned by the Super Members Council (SMC). And if you drill down into younger Australians, it gets worse with 28% being unable to name their fund at all. That’s disengagement. And disengagement costs real money.
The Research
The research found more than a third of Australians either rarely check their super or only look at it once a year. For many younger workers, super feels distant. Abstract. A future problem. In fact, 33% said it doesn’t even feel like their money. And frankly, as a 47 year old, I absolutely understand the sentiment. I just imagine never making retirement age because I’ll get hit by that proverbial bus one day! But the point is a good one: when something doesn’t feel like yours, you don’t protect it. You don’t question it or optimise it, you just let it drift. And super is not something you want drifting.
Fees And All That
Here’s where the numbers start to bite. Paying just 0.1% more in fees could leave you $14,000 worse off by retirement. Push that to 1% extra in fees, and you’re staring at a $128,000 hit. That’s not a rounding error. That’s the difference between a comfortable buffer and watching every dollar. Fees don’t look dangerous in the short term. But compounding works both ways. It builds wealth, and it quietly siphons it off. That’s why “net benefit”, the returns after fees, actually matters. Separate research showed that younger Australians who understand their super are six times more likely to take action to improve it.
Unpaid Super
Then there’s unpaid super: One in four workers are affected each year. That’s 3.3 million Australians missing out on nearly $6 billion annually. If you’re not checking your super, you won’t know if your employer isn’t paying it properly.
Your Contributions
The Super Guarantee is rising to 12 per cent. That’s positive. But compulsory contributions don’t solve disengagement. Automatic doesn’t mean optimal. You can still be in a high-fee fund; you can still be invested in an option that doesn’t suit your age. SMC modelling showed a 30-year-old salary sacrificing just $20 a week could retire with $67,000 more in super, plus receive a tax saving. Twenty dollars a week!
Insurance is Important
Super rewards early action more than heroic late effort. And here’s the other important part hardly anyone checks – insurance inside super. Most super funds automatically include Death, TPD (Total and Permanent Disability) insurance and IP (Income Protection) insurance. TPD insurance generally pays a lump sum if you’re permanently unable to work due to illness or injury. IP insurance pays a portion of your income for a period of time if you’re temporarily unable to work. It’s sensible protection, with premiums paid from your employment contributions.
But this recent evidence of disengagement means people don’t know what they’re covered for. Like your investment options, insurance in super needs attention. For young workers with no dependants, excessive cover might quietly erode long-term savings. For someone with a mortgage and kids, however, underinsurance can be catastrophic. It’s not about blindly cancelling cover. It’s about checking:
– What cover do you actually have?
– How much are you paying?
– Does the policy still suit your circumstances?
A five-minute review could stop years of silent erosion.
Just A Few Minutes of Your Time
None of this is dramatic, which is probably the point. Too many Australians risk sleepwalking into retirement with less money than they should have because they haven’t felt confident to engage. Or they’re putting their families and own lifestyle at risk if they fall ill and don’t have the insurance safety net to fall into. Small differences in super can add up to life-changing sums over time. Super isn’t some distant pile of money for an older version of you. It’s your money, just parked for later. And the earlier you treat it like yours, the better it’s going to look later.
There is, of course, plenty to know that is not covered here, and as the usual legal disclaimer goes, the information here is of a general nature because legal advice always depends on your circumstances.
Contact
You can call us at (03) 9969 7077 or via email at info@leonardwelch.au.
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