Superannuation funds are the cumulative benefits you receive when you retire. In Australia it is mandatory for employers to contribute to this fund; however employees are also encouraged to voluntarily contribute a part of their income for this retirement fund. Super funds are subject to certain tax and fees. These tax and fees can decide what benefits you receive when you retire.
Depending on the super fund you decide to opt for you may be required to pay standard fees or slightly higher fees. Certain other factors such as the number of super accounts you have will also directly influence the fees you end up paying each year.
Fees can make a big difference to your benefit
- Although each person is supposed to have only 1 super account, some people have more than 1 super account. Such a situation can arise when you change jobs frequently or change your place of residence frequently. By only having one superannuation account where all your super funds are accumulated, you can avoid paying additional fees. It should be noted that the fees are charged for per superannuation account and not per person hence having only 1 account can prevent you from paying additional fees. While it may appear that the fees you are paying are nominal, after calculating the total fees you may realize that the fees you are paying are very high. This is especially true if you have more than 1 super account.
- Before setting up a superannuation account you should make it a point to go through the fee structure and compare the fee structure between various super funds if required. It should be noted that if you have unclaimed funds or if you have lost your super funds then your funds can be claimed by visiting the ATO and filling out a form. You can also fund your lost funds by asking the ATO to use a Super Seeker software program. Additional details will have to be provided by you to get back your funds and these additional details include your full name and your tax number.
Making sure that you read the PDS of funds
- It is mandatory and a legal requirement for the PDS to declare all the fees charged on super accounts. The PDS should not only include details such as a listing of all fees laid out in a single table but also a separate table displaying the individual fees that you have to pay on an ongoing basis. In addition the PDS should also provide other relevant data pertaining to fees on your super fund and details regarding to what these fees are for.
- It should be noted that by reading the PDS you will be able to compare fees easily and you will be able to understand other ways you can prevent paying additional fees. When set up properly superannuation accounts can ensure that you get maximum benefits from super funds and that you can enjoy your retirement without worrying about borrowing money from friends and relatives.