With the start of the new year you might be thinking about the future and any positive changes you can make for the year ahead.
Making a New Year’s resolution can be easy, but following through can sometimes be challenging – especially if it’s difficult to see the incentive.
Making a decision to look after your super can be different. A little change now has the potential to make a real impact in your future – in fact, it could be one of the smartest ways to start 2018.
Three things you can do that could make a big difference:
- Choose a super fund that’s right for you
- Consolidate your super
- Make extra contributions
Choose a super fund that’s right for you
Finding a super fund that suits you might sound obvious, but 56% of 18-39 year olds go with the default option provided by their employer1. The good news is this number is coming down (it was 65% in 2016) as more young people take an active interest in what’s happening with their money.
When choosing a super fund, look closely at the fees you’re paying. ASIC’s MoneySmart website suggests a 1% difference in fees now could contribute to as much as a 20% difference in 30 years’ time2.
MoneySmart also says:
“Choosing a super fund is a bit like dating. Pick the right fund and you'll be set for a long, happy and comfortable life when you retire. Set your sights on the wrong one and you're in for a world of pain3."
Consolidate your super
For every job you’ve had, you could have super that's in a different fund. You can choose to bring all your super together into one fund, but you need to find it first. The Australian Taxation Office offers a service that can help you find any lost super – you just need to register for MyGov to use it.
With Essential Super, you can run a super search instantly through the CommBank app or NetBank. Simply log on, select your Essential Super account and follow the links to ‘Consolidate your super’.
If you do decide to combine all your other super into one account, it makes sense to consider if you can replace any insurance cover you might lose and whether there are any costs, risks and tax implications from consolidating4.
Make extra contributions
Making extra contributions to your super can be tax effective and give your super balance a boost. The earlier you start making these contributions, the more time they have to accumulate – over 30 years, a relatively small amount like $20 a week extra may make a real difference. Get an estimate of the impact you could see in your super balance when the time comes to retire by using MoneySmart’s superannuation calculator.
It’s also possible to get co-contributions from the government. People earning up to $51,813 a year can qualify for government co-contributions, and the amount you’re eligible for will vary depending on how much you earn5. If you earn less than $36,813 a year and you contribute $1,000 extra per year to your super, the government will put in the maximum co-contribution amount of $500.
Sorting your super is an easy way to help set yourself up for the future. No longer out of sight, out of mind - with Essential Super, you can keep track of your super balance next to your other accounts in the CommBank app.
1. Source: Investment Trends 2017 Member sentiment and communications report
2. Source: “Super fees” https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/super-fees
3. Source: “Choosing a Super Fund” https://www.moneysmart.gov.au/superannuation-and-retirement/how-super-works/choosing-a-super-fund
4. Before you make a decision on consolidating your super, you should compare the costs, fees, risks and benefits of your other super funds. Consider whether you can replace any insurance cover you may lose upon rolling over and potential costs for withdrawing from other super funds, as well as any investment or tax implications. You should also decide which super fund you want your employer to pay your future employer contributions to and complete a Super Choice form if necessary.
5. Source: ATO https://www.ato.gov.au/individuals/super/in-detail/growing/super-co-contribution/
Things to consider: Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 (CFS) is the issuer of interests in Commonwealth Essential Super ABN 56 601 925 435 (Essential Super) and is a wholly owned subsidiary of Commonwealth Bank of Australia ABN 48 123 123 124 (Bank). This document may include financial product advice but does not consider your individual objectives, financial circumstances or needs. You should read the Product Disclosure Statement (PDS) for Essential Super before making any decision regarding this product. Download the PDS, collect one from any Bank branch or call us on 13 40 74 for a copy. The Bank and its subsidiaries do not guarantee the performance of Essential Super and an investment in this product is subject to risk, loss of income and capital invested. An investment in Essential Super is via a superannuation trust and is therefore not an investment in, deposit with or other liability of the Bank or its subsidiaries. Where we mention ‘we’, ‘us’ or ‘our’, we mean CFS. Information is based on current laws and may be subject to change.