How to read your super statement

Before you change, make sure you understand what the fund’s definitions of things such as ”high growth” means.

If you’re a member of an industry, retail or corporate superannuation fund, you should be receiving a fund statement every six months.

By Penny Pryor

If you’re like most people, you probably open it and put it in a drawer, or perhaps you don’t even open it, being totally bamboozled in the past when you have. 

Fortunately, the way super funds report to you has been made a lot simpler over the past few years, and most of them present it in a simple-to-read format that is a lot more user-friendly. They are also now allowed to include some information around what your balance might look like when you retire.

But you should still take a good look at the information provided at least once a year, to make sure it’s matching up with what the fund has said it will do. 

Let’s look at the basics:

1) At age 65

Possibly the first thing you might see on your statement, even before you get to the balance, is what your balance might look like at age 65. Don’t confuse this with your current balance! 

Remember, a lot of assumptions have gone into that number. For a start, it will be assuming a certain rate of investment returns –say, 3 per cent per annum after inflation, and that you continue to make contributions at the same rate you have been. 

Related: Why 80 is the new 60 when it comes to work and retirement

But perhaps more importantly, it also assumes that super laws and regulations are unchanged.

Underneath that lump sum will also be an annual income stream amount – or the amount you could receive every year until aged 90 – which also includes a number of assumptions (detailed somewhere on your statement).

2) Fees

Your super balance should appear in a prominent place and perhaps underneath it you will see an “at-a-glance” breakout. It might look something like the below:

Opening balance as at 1 July 

$143,115.28

Plus

All contributions received

$10,443.00

 

Rollovers, transfers and proceeds

$0.00

 

Investment earnings

$16,360.88

Less

Fees, adjustments and payments

-$65.00

 

Insurance premiums and adjustments

-$390.60

 

Taxes

-$75.00

 

 

$169,388.56

But this isn’t the whole picture. For example, if the $65 for fees, adjustments and payments appears small, that’s because it’s only administration fees. Management costs (for investment) are not included. 

The above super fund, for example, also had a fee of $1,147.66 in management costs, which meant total fees were $1,212.66 for the 12 months – significantly more than the $65 cited in the at-a-glance box, and more than 10 per cent of contributions made during the period.

3) Insurance

If you are in a retail, industry or corporate superannuation fund, then you will have some kind of insurance cover included. The line in the at-a-glance box shows the premiums paid and there should be another breakout that shows the amount you should receive if you die (which will be the total of the covered amount plus what you have remaining in super), and an amount if you become totally and permanently disabled.

This may also come with a disclaimer that any insured benefits depend upon “you meeting the policy conditions and our records being correct”.

It’s important you understand the policy conditions. As group superannuation policies have become more expensive over the past few years, some funds have changed the definitions around the policies they provide members. 

For example, TPD (total and permanent disability) policies may only be payable if you are no longer able to do any kind of work, rather than what you have been previously employed as. Look for the product disclosure statement on your fund’s website to check the kind of cover you have.

And you should also know that when it comes to death benefits, the fund ultimately has the discretion to decide who receives your super after you die, unless you have a valid binding death benefit nomination in place. 

Unfortunately, you can only give binding death benefit nominations in favour of eligible dependents and legal personal representatives, so if you have neither of those, you can’t be 100 per cent sure that your wishes will be followed. 

Need to know

It may not be a piece of light reading, but use the opportunity of your annual statement to review a few things like insurance, as outlined above, and your investment options. As well as the performance in your option, it should also show the performance of all other investment options the fund has available. 

Before you change, make sure you understand what the fund’s definitions of things such as "high growth” means. Ask yourself if you really want to be invested in something that’s 93 per cent shares before you jump into that option, just because it’s had the best annual returns.

And also check that your contribution amounts on the statement add up to what you know has been contributed over the course of the year – either by your employer or yourself. 

Everyone makes mistakes, including employers. 

Penny Pryor has 15 years’ experience in writing, reporting and editing financial services publications for both institutional and retail readers. She is editor of the Switzer Super Report.

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