SUPER REVIEW CHECKLIST: YOUR ANNUAL SUPER STATEMENT
Whilst the recent implementation of the ‘Protecting Your Super Package’ has received a somewhat mixed reception, it has provided some people with a much-needed prompt to review their super details.
Another opportunity to do so occurs with the release of annual super statements. As a super fund member, you will be receiving your annual statement soon, if not already, either electronically or via post mail.
Here is a helpful checklist for reviewing the details contained in this important document.
Your annual super statement
1. Check your personal details (your information on file)
Are your residential/email address and phone number details correct? These details are what your super fund uses for correspondence, for example, sending forms (notice of intent to claim a deduction) or information updates (the Protecting Your Super Package).
Has your tax file number (TFN) been supplied? By supplying your TFN, you are enabling your super fund to pay tax on your concessional contributions at a maximum of 15%, and accept your non-concessional contributions (this also has implications regarding eligibility for the Government’s co-contribution).
If listed, are your date of birth, salary, occupation, and smoker status details correct? Depending on your personal insurance arrangements, these details may be linked to your personal insurances held inside of super; if these details are incorrect, consider having a personal insurance review.
Is a beneficiary nomination in place? It’s important to ensure a beneficiary nomination has been recorded – and, is up-to-date, valid, and reflects your wishes (whether you wish for your super to be paid to your estate, directly to your dependents or as a combination of both upon your passing).
2. Check your transaction summary (your debits and credits)
In a somewhat comparable fashion to your personal income/cashflow statement, your super account’s transaction summary highlights ‘credits and debits’ for the financial year that has been:
Credits. For example, rollovers, personal (concessional and non-concessional) and employer contributions (compulsory, voluntary and salary sacrifice), Government contributions (low-income super contribution and co-contribution), as well as fee rebates and investment distributions.
Debits. For example, personal insurance premiums (life, total and permanent disability and income protection), Government taxes (contributions tax), administration, investment and advice fees, as well as expense recovery fees (Government, legislative, and prudential) and family law split fees.
Given above, here are just a few areas to keep an eye on regarding your super account’s credits and debits:
Credits. For example, for most employees, their employer is required to contribute 9.5% equivalent of their salary each year as a compulsory super guarantee contribution.
Please note: Where an employee uses an employee salary sacrifice arrangement, the employer can reduce their compulsory super guarantee contributions, and calculate their SGC on their net salary. This will depend on what has been agreed with the employer.
Debits. For example, as part of the Protecting Your Super Package, from 1 July 2019, new restrictions apply with regards to trustees charging members certain fees and costs.
3. Check your investment summary (your investment risk profile, asset allocation, and performance)
When investing inside of or outside of super, it’s important to determine an appropriate investment risk profile. Your investment risk profile defines your asset allocation, and is determined after consideration of, for example:
your desire to align your investment values with your personal values,
your understanding of investment fundamentals (risk/return, asset classes, diversification, etc.),
your expected investment performance, time horizon, and tolerance/capacity for risk.
Given above, it’s important to note that your investment risk profile inside of super may, for example:
differ from your spouse,
differ from your investment portfolio outside of super,
change over time, as you approach or reach retirement.
4. Check your account balance (your opening and closing account balance)
An intrinsic part of SMART goal-setting is knowing how you’re tracking (measurability). Just as you may know your bank account balance, also take an interest in your super account balance.
In a similar vein, whilst it’s important not to compare yourself to others (as you are unique!), a little bit of perspective may serve to bolster your resolve further in achieving your financial goals and objectives.
5. Check your beneficiaries (your estate planning for super)
Unlike most other investments, super isn’t necessarily distributed via your will when you pass away.
Most super funds offer members the ability to make a beneficiary nomination, which helps trustees understand to whom and how you would like your super distributed upon your passing.
Given the above, regarding your beneficiary nomination, consider the following, for example:
your nominated beneficiaries,
your relationship to the nominated beneficiaries,
your percentage allocation to the nominated beneficiaries,
your type of nomination, whether it is binding or non-binding, and if it lapses.
6. Check your insurances (your Plan B if the unexpected was to occur)
The path to achieving your financial goals and objectives may not always be smooth sailing, i.e. risk-free. As such, it’s important to consider having strategies in place to help manage whatever life may throw your way.
Establishing a comprehensive personal insurance plan, and reviewing it regularly so it remains appropriate to your financial situation, goals and objectives, is one such strategy.
Given above, if you have personal insurances inside of super, consider the following, for example:
your salary, occupation, and smoker status,
your types of cover and their insured amounts,
your claim definitions and other policy features,
your exclusions and/or loadings (if applicable).
A personal insurance review (of super and non-super insurance cover) may be an important consideration where a recent change has occurred, such as a marriage/divorce, birth of a child, salary increase, or taking out/increasing a mortgage.
Also, you may wish to take some time to revisit our article, ‘1 July 2019: Protecting Your Super Package’, where we discuss changes to the provision of insurances inside super.
Your annual super statement is a good prompt and opportunity to review your super.
As such, before you file your annual super statement away this year, take some time to review the details contained within this important document. We have put together the checklist above to help in this regard.
If you have any questions regarding this article, please do not hesitate to contact us.