So last week’s passage through parliament of a Bill expanding the amount of choice in the superannuation system ought to be reason for a small celebration.
The Treasury Laws Amendment (Your Superannuation, Your Choice) Bill 2019 finally provides near universal choice of super fund by breaking the nexus between certain industrial relations agreements and the ability of an individual worker to select their own fund to receive their superannuation contributions.
The superannuation system has much to thank the industrial relations system for. The foresight of key union officials back in the 1980s lead to the creation of today’s industry super funds. But with superannuation now holding around $3 trillion of Australians’ retirement savings the focus has shifted to improving the system’s efficiency and competitiveness as called out by a range of reviews from the Financial System Inquiry and the Productivity Commission.
The legislative changes made last week introduce a fundamental choice for some 800,000 working Australians – the right to choose the fund their hard-earned contributions are paid to.
Small decisions in superannuation can have big long-term impacts.
Choosing which fund to hitch your retirement savings wagon to is one of those decisions. Choosing to consolidate your multiple superannuation accounts into one is another.
While most workers already have the ability to elect which fund your employer pays your superannuation contributions into this piece of legislation applies to those who are under an enterprise agreement or workplace determination where their employer designates their fund.
The intention of this change is to give employees more control and choice over their superannuation and to encourage more engagement, with the hope that the number of individuals with multiple funds having their accounts eroded by two lots of fees will reduce over time.
Superannuation may not be deemed the most pressing issue on the agenda for those who are still far from retirement, but it has good reason to make the list. To ensure you can later live the lifestyle you want, paying attention to your superannuation now is vital.
One of the simplest ways to get on top of your superannuation is to choose to consolidate it all into the one account. Many of us will change jobs several times in our lifetime and may have already accumulated a few default accounts selected by our past employers. By sticking to just one super fund or consolidating your accounts regularly, you avoid paying multiple account fees and insurance premiums. These fees may not seem costly at first, but over time, they will inevitably eat away at your superannuation balance. Consolidating your superannuation also allows you to know exactly how much you have in your fund at any given time.
When consolidating super funds take the time to understand the insurance benefits and options offered by each fund to make sure you are not walking away from valuable insurance cover.
For those people who have not had the ability to choose funds previously it is also worth reframing the way we view superannuation in our minds. Because we cannot usually access it until retirement and contributions are generally paid directly into our accounts by our employer, there is a tendency to view it as money we don’t yet own or control – particularly in our younger years when the account balance is building slowly.
There is a lot of discussion in the superannuation industry about member engagement. Being engaged with your super is smart but it doesn’t mean you have to suddenly have a view on investment markets or to directly control where your money is invested.
This is where an abundance of choice can work against you. Vanguard has produced a research report titled How Australia Saves and one of the key findings was that fund members who exercised investment choice over a 10 year period actually underperformed those members in the default MySuper portfolio offered by the funds in the survey.
So when exercising choice of fund understand that there are many well-diversified default superannuation options on the market so letting the professionals manage the portfolio is usually the best option for most fund members.
The bottom line is that superannuation is simply a concessional tax structure wrapped around your retirement savings where the federal government is offering tax concessions as the trade-off for locking those savings away until the time of retirement.
So mentally put it in the long-term savings bucket by all means but give it the same amount of attention you normally pay to your other investments. This means understanding your retirement goals, the costs you’re paying, and the investment strategy you’ve selected so that your money is being utilised in a way that best suits you.
Written by Robin Bowerman
Head of Corporate Affairs at Vanguard.
01 September 2020
BEc (Acc), MBA, CPA, FFin
David has been in the Financial Services Industry for nearly 30 years. He was one of the founding Directors of the successful Financial Planning and Stockbroking Practice, Henderson Gregory Forrest, for a decade. Prior to that, he held senior roles in companies such as ING, KPMG Accountants and AMP. David was previously Chairman of OAMPS Superannuation Trustee Board and currently serves as an independent Board Director for several companies.
David’s extensive experience in all forms of superannuation, including Self Managed Super Funds (SMSF), Defined Benefit Funds, retirement funding through Account Based Pensions, stockbroking with a focus on Direct Share Investment, Taxation/Remuneration Planning, Centrelink, Aged Care and business management, equip him to advise expertly on all aspects of Financial Advice.
Those with a particular interest in superannuation/SMSFs, direct share investment, salary packaging or applying for the Centrelink Pension will find his knowledge and ability in formulating and implementing creative, logical and simple wealth creation strategies a valuable asset.
David maintains a strong personalised client service focus, providing tailored solutions for clients.
David Forrest is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846
Business Finance Manager
B Bus (Acc), CPA
Michelle’s career has spanned across the Financial Services, Retirement Living and Aged Care industries working in the private sector, not for profit and more recently with the state government for over 20 years. Her experience extends to many facets of the financial services industry, having worked in superannuation administration, technical support and financial planning practice administration.
Commencing with AMP and subsequently working in commerce and accounting roles with companies such as Brambles, Adelaide Bank Retirement Services, ECH Inc and SA Health and Wellbeing, Michelle returns to financial services after working in practice financial management at Henderson Gregory Forrest. This wide range of experience from senior accounting and management roles has provided Michelle with a strong background in business administration.
With an astute financial acumen and keen interest in business improvement strategies, Michelle ensures the smooth running of the Integrity Financial Advisory practice providing valued management support to our personalised client service focus.
B Com, Dip FP
Darren joins the Integrity team as a strong technical specialist with almost 20 years’ in the Financial Services industry. He has extensive experience advising clients on how to build and protect wealth, prepare for retirement and retire comfortably.
Commencing with advising clients on direct equities for over 10 years at Baker Young, Tolhurst Noall, and ABN AMRO Morgans, his career expanded to providing holistic client advice, having operated his own financial services licence and company. Most recently having worked for a 'Big 4' bank, he has welcomed the more personalised ‘client first’ approach that is evident at Integrity Financial Advisory.
With a deep understanding of investment markets, he is appropriately qualified and authorised to provide direct share advice, as well as superannuation/SMSF advice, encompassing both investments and insurance.
Meticulous in his approach, he aims to deliver quality outcomes for clients by understanding their financial situation and needs before providing advice which is central to our advice process. Darren supports David in tailoring solutions for all client financial advice needs.
Darren Chalk is an Authorised Representative of Integrity Financial (SA) Pty Ltd ABN 16 133 921 187 — AFSL No 334846
Client Service Manager
Natasha commenced working in the financial services industry in June 2008 and is a new addition to the Integrity team. During the past 11 years, she worked closely with advisers providing administration support in a share broking and financial advice business.
Having successfully completed her RG146 accreditation in securities and managed investments and continued her studies to complete her competency in Superannuation, Natasha can ably assist with all aspects of fixed interest, cash management, portfolio administration, direct shares and client advice implementation.
Natasha takes time to ensure she understands our client’s financial goals and needs and believes in creating, preserving and utilising wealth through effective financial management as a key objective in helping clients.
Client Service Manager
Kelly has worked in the Financial Services Industry for over 10 years and has supported David since 2013. Kelly’s primary background is in customer service and administration.
On starting in the industry, Kelly initially focused on direct shares, stockbroking administration and client liaison. Since moving to the Client Service Manager role, Kelly has developed skills encompassing all aspects of financial planning including client advice implementation and term deposit management.
Kelly’s experience in the direct share environment, especially management of estates, provides a key part of the direct equity expertise in Integrity’s Client Service Team.
Returning from Parental Leave following the arrival of her second child, Kelly has developed further honed multi-tasking skills after juggling the demands of a growing family.
Client Service Manager
Jasmine has worked in the financial services industry for over 12 years in all areas of client administration, working with David since 2013.
Jasmine has extensive knowledge and experience in client service including implementation of advice, portfolio reporting, assisting with the establishment of Self Managed Super Funds (SMSFs), term deposit management and a long history of helping clients with their enquiries.
Jasmine’s attention to detail, yet gentle approach, means she is able to solve the trickiest of questions for our client community.
Jasmine has gained her Certificate III in Financial Services qualification.
Client Service Manager
Merrilyn has worked in the financial services industry for over 11 years in all areas of client administration, and is a new addition to our client services team, returning from Melbourne to join the team in June 2019.
Merrilyn has extensive knowledge and experience in client service including implementation of advice, managed fund administration, assisting with the establishment of Self Managed Super Funds (SMSFs) and process improvement for the previous practices she has worked with. Merrilyn’s experience with direct shares constitutes the other part of our administrative support for direct equity investments.
Merrilyn’s warm and caring nature continues to endear her to our clients and she has already established herself as a valued member of our team.