MySuper could do you a favour
AS part of its election manifesto, Labor has promised to introduce a no frills default fund (MySuper) to which employer contributions would automatically be directed if the employee did not make a choice of their own.
There will not be one single fund, and the major superannuation providers now will be encouraged to introduce their own version of MySuper.
This was one of the key recommendations of the recently released Cooper report, but take heed of these key phrases from that report. “MySuper… recognises that direct engagement in superannuation is not a priority for a large proportion of the population. A touchstone of MySuper is that its members defer to the trustee generally in relation to all aspects of their superannuation”.
In short, Cooper is saying that the control of most Australians’ superannuation should be taken from them because they are too disinterested to take care of it themselves.
Even though a no frills fund might suit some people it is important to understand that your superannuation fund may well be your major asset apart from your home when you retire. This is why it is important to seek advice to ensure that the fund you choose is appropriate for your goals and your personal situation.
Issues to be addressed include the need for life insurance, the appropriate mix of assets, flexibility, customer service the ability to make binding nominations.
Rising life expectancies mean that a major danger for most Australians is living longer than their money. I have stressed repeatedly the importance of looking upon super as a tool to save tax while building wealth, and at the same time making sure it meshes with the other assets that you hold, such as your own home, investment properties and your share portfolio.
Fortunately we live in a country that encourages freedom of choice and where good financial advice is readily available. The ones who exercise that choice and who seek and use good advice will be the winners in the long run.
Noel Whittaker is a director of Whittaker Macnaught Pty Ltd. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. His email is firstname.lastname@example.org.