Ignoring your super statement is a serious problem

BY now you should have received your annual superannuation statement.  You've probably taken one look at all the numbers and decided to put it aside until you've got more time to think about it.

Think again - ignoring that statement could cost you dearly in the long term, especially if you are young. 

I was horrified when looking at a friend's daughter's latest superannuation statement, to find the category that her employer had placed her in had averaged just 2.8 per cent per annum for the last ten years.  That's a woeful return when you consider that the All Ordinaries Accumulation Index has done better than 8 per cent per annum for that period.

This is for a person who is aged just 28, and who probably has another 70 years of living and investing ahead of her. 

This is why you should look carefully at the returns your superannuation has achieved in the past, and decide whether the asset allocation you have chosen is appropriate for your circumstances.

If your assets are building up, or you are over 40, you should be taking advice on the kind of assets you should hold in super, but for young people it's a no brainer - just choose the highest growth option that is available.

The next step is to consider what fees are being taken from our account.  You can't dodge the 15 per cent government tax on employer contributions, but one fund may have a much higher account keeping fee from another.

It is usually tax effective to have your life and TPD insurance within your fund as it enables the premiums to be paid from pre tax dollars.  But, every dollar taken in insurance premiums from your superannuation account means less money in there to grow.

However, the big decisions are whether you need life insurance at all, and if you do, whether what you have in the fund is sufficient.  If you don't need it, cancel it.  If you need more, increase it.

Topics:  noel whittaker opinion superannuation

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