Three things you should know about super

Superannuation (or Super) is a percentage of your income put aside by your employer over your working life to help fund your retirement.

It’s a compulsory system in Australia that requires contributions to be made, most commonly, into either an APRA regulated retail or industry superfund (run by a board of trustees) or an ATO regulated self-managed super fund (run by the members).

Three things you should know about super

Here are three more things every Australian should know about their super:

1. Super should be thought of as an investment like every other

When we talk about investing, many of us automatically think about investing individually in the share market, or perhaps investing in property.

What some might not always remember is that superannuation is an investment too. In fact, it could be one of the most important long-term investments you ever make because its purpose is to ensure you have money once you stop actively earning money.

While for APRA regulated superfunds a team of professionals are employed to invest your superannuation savings on your behalf, you do have the ability to decide on your investment strategy.

In the same way you would determine an asset allocation strategy for your individual investment portfolio, you can also do the same for your superannuation.

For example, most super funds offer a growth, balanced or conservative investment option. Similar to a diversified ETF where the mix of underlying assets is tailored to your return objectives and risk profile, super investment options do the same.

A growth superannuation option often allocates upwards of 70 per cent to growth assets like shares or property, and 30 per cent or less to fixed interest or cash. A conservative option will generally allocate 30 per cent to growth assets and the remaining 70 per cent to income assets.

2. Just like when investing in shares and bonds, keeping costs low is essential when it comes to Super

Like with every investment, the less you pay, more you get to keep and compound over time. It’s no different when it comes to super.

The easiest way to ensure you manage costs effectively is to consolidate all of your superannuation savings into the one account. This will remove any duplicate account or management and possibly insurance fees, and it makes keeping track of your super a lot easier.

Some investors also view tax as a cost. While both contributions to super and their earnings are taxed, they are done so at lower rates (15 per cent) than many investors’ marginal tax rates.

Salary earners can make additional super pre-tax contributions in lieu of take-home pay; generally known as concessional contributions or salary sacrifice contributions. These contributions (up to a cap) are again all taxed at 15 per cent, which may result in tax savings as you reduce your taxable income, and therefore potentially the income tax you pay.

3. Just because retirement is far away, doesn’t mean attention to super should wait

For younger Australians, it might seem backwards to worry about retirement income before you think about meeting other financial goals. But because compounding is so powerful, starting early gives you more flexibility later in life.

Because of this, it’s useful to remember that it’s never too early to save for retirement and that your super deserves consideration well before it’s time to retire.

This could be as easy as checking your super is being paid correctly by your employer or ensuring all your details are accurately provided to your superfund so that your contributions can be claimed (according to the ATO, there’s up to $14 billion in “lost” super because the fund can’t contact its owner).

It’s also as simple as comparing the performance and costs of different super products and funds to find the right investment option and provider for you. Recently under the government’s Your Super, Your Future reforms, superfund providers are required to conduct an annual performance test for its MySuper products to increase transparency for its members. You can read more about it here.

If you would like to learn more about your super, talk to us today on 03 9553 0271.

Source: Vanguard May 2022

Reproduced with permission of Vanguard Investments Australia Ltd

Vanguard Investments Australia Ltd (ABN 72 072 881 086 / AFS Licence 227263) is the product issuer. We have not taken yours and your clients’ circumstances into account when preparing this material so it may not be applicable to the particular situation you are considering. You should consider your circumstances and our Product Disclosure Statement (PDS) or Prospectus before making any investment decision. You can access our PDS or Prospectus online or by calling us. This material was prepared in good faith and we accept no liability for any errors or omissions. Past performance is not an indication of future performance.

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Authorised Representative 298494
Interprac Financial Planning Pty Ltd 

Darryl Jopling

Senior Adviser

I have worked in the financial services industry since 1982 and as a Financial Adviser since 1999.

I have worked for large Financial Planning businesses, Membership based organisations and looked after the financial planning needs of clients within an Accounting Practice before starting my own business.

I am married, have 4 older children and a grandson and I am keen golfer with mixed results like many .

I have been through many of the strategies I talk with clients about myself and with my family.

I have been through the journey of seeing my parents move into Aged care and negotiated the difficulties and pitfalls of understanding the system for them and this gives me an excellent insight into what is required to assist families at this difficult time.

In a previous roll I used to run retirement seminars looking at Centrelink and Retirement Incomes and how to make these work for you. I have helped many of my clients with Aged Care advice when their parents needed to move into Nursing Homes. For many clients I assist them with superannuation, building wealth and protecting their loved ones with insurance.

I am supported by his, Licensee, Interprac Financial Planning’s in-house resources and ongoing technical, systems and training.

I am committed to understanding your needs and identifying strategies and products to help you achieve your goals.

My guiding principle as an Adviser is to design plans which help to provide my clients with clarity of purpose and the opportunity to build a solid financial foundation.
I will take the time to listen, explain things clearly and keep you informed throughout the advice process.

My experience is complemented by professional qualifications including:

  • Certified Financial PlannerTM Professional
  • Diploma of Financial Planning

At Choice Financial Advice we work with you along the way on life’s journey.

Whether you are getting married, starting a family, embarking on the trip of a lifetime, planning to enjoy your years after work or assisting elderly parents with Aged Care and Nursing Home placements, we can help.