Yahoo Finance 1 million Aussies told to keep eye out for $660,000 letters
More than 1 million Australians will receive letters in the next four weeks informing them that their superannuation fund is underperforming, and acting on that information could deliver a staggering $660,000 per person boost by retirement.
Underperforming super funds are now required to send letters to their members informing them of their lacklustre performance over the next 28 days, following a test by the Australian Prudential Regulation Authority (APRA).
APRA compared super funds’ performance and fees and found 13 funds failed to meet its benchmark, with nearly 1.1 million Australians having invested $56.2 billion in the funds.
Also read: The 13 funds that ‘failed’ APRAs test
The ‘failed’ 13 funds now have until 27 September to write to their members telling them of their fail mark, and choose whether to improve their products, or begin planning to transfer their members to a higher-performing fund.
In the letters, the funds also need to provide information on how members can switch into a better performing peer, and provide a link to the ATO’s YourSuper comparison tool: YourSuper comparison tool, so members can see for themselves how their funds stack up.
WATCH: Tips for a successful retirement.
Switching from one of the worst-performing super funds to one of the best could boost the average worker’s superannuation by $660,000 by retirement, according to the Productivity Commission.
The Federal Government believes that by prompting funds to lift their performance, and for members to switch to better products, it will save workers some $17.9 billion over the next 10 years.
Your super fund is talking to you, but are you listening?
For members, this is a good reminder to always check correspondence from their superannuation fund, Ladies Finance Club founder and financial wellness advocate Molly Benjamin told Yahoo Finance.
More than one third (34 per cent) admit that they rarely, or never open communications from their fund, research from the Association of Superannuation Funds of Australia (ASFA) found in 2019.
And among young Australians aged 18-34, that increases to 52 per cent.
Across all age groups, only 24 per cent always open communications from their super fund, while men are also more likely to be engaged with their superannuation fund than women.
“The big thing is that we don’t stick that letter in the drawer with all the other letters that we don’t open, and we actually engage with our super,” Benjamin said.
“Many super funds are online now, and many actually have an app, so you can download those onto your phone and really easily check.
“That’s really important, because you need to be checking how your super is actually performing, especially in comparison to other supers, and to the broader index.”
That means that if a member’s fund is invested into the ASX, looking at how the ASX is doing and comparing it to the fund’s performance and the fees that may have eaten into the returns.
“Even just finding out what you are invested in, and does it fit with your values? So many people are invested into industries that go against what they believe in, as far as mining and fossil fuels, so it’s really important to find out where your money is going.”
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