Suddenly super

It’s like a visit to the dentist – you know you should do it, but you keep putting it off. But the sooner you focus on your superannuation, the better off you will be.

Back to basics
A survey by the Institute of Chartered Accountants in Australia found half of all Australians under the age of 45 worry about financing their retirement.

“There’s a really big gap between people’s perceptions and their behaviour with super... it’s a positive sign that they’re thinking about it, but it hasn’t translated into action. They’re interested in the outcome but not the process,” says Linda Elkins, advisory board member of The Financial Literacy Foundation and general manager of education and communication at Sunsuper, an industry super fund.

The challenge here is for the government and industry to reach people who are unconcerned with, or not interested in, investing in super. That’s why the Australian Federal Government has introduced a co-contribution scheme for employees earning less than $58,000 annually. Under this scheme the government contributes $1,500 into the super fund of anyone earning less than $28,000 a year. If you qualify, you have to be willing to match it with an initial $1,000. If you earn more than $28,000 but less than $58,000, you may be eligible for a reduced co-contribution from the government. For more information, take a look at www.ato.gov.au/super.

But remember, it’s no good topping up your super if you end up with huge debts and no way to pay them off at retirement. Your super will be eroded.

“Don’t spend more than you earn,” says Linda Elkins. “Managing money really is all about financial understanding and organising your cash flow. Super is not always the solution. Young people may be best served getting their debts under control or looking at their mortgage... The bottom line is that it comes down to individual circumstances and how well equipped you are.”

Choose your own
Superannuation choice or the right to choose your super fund (other than your employer’s scheme) has been around since mid-2005. It means you are able to switch your fund every year (unless your fund has other conditions).

Anne-Marie Corboy, chief executive officer of industry super fund HESTA, which has more than 80 per cent female members, says her company’s research confirms most women are less sure about choosing a fund and more worried about having to rely on partners to support them.

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