Protecting your super changes

Protecting your super changes


[Male Host, ABC]: Well superannuation may not exactly be sparkling dinner party conversation, but perhaps it should be. [Female Host, ABC]: We’re bringing it back. Many of us ignore our superannuation, but as we’re coming to the end of the financial year now is the chance to take control. Here to help us is Laura Higgins from ASIC’s MoneySmart. Laura, thanks for joining us this morning. We’ve got some reforms to super coming up including something about insurance. What’s the reform coming up and tell us a bit more about super insurance? [Laura Higgins, ASIC SEL]: Absolutely. So there are some reforms that were announced in the 2018-19 budget and they do come into effect the first of July. Now the four reforms were designed to assist Australians superannuation savings from being eroded by fees and by insurance premiums. And also to reduce the unintended consequences of multiple accounts. There’s a few things happening. So one is that as of 1 July if you have an inactive superannuation account, which means you haven’t contributed in 16 months, you will automatically, the insurance premiums and you’re access to that insurance through that account will stop. Okay, so what’s happening is that, super funds are contacting their members to let them know. So if they need that insurance and want that insurance, they need to do something. Right. So they need to either contact their superannuation fund or they need to make a contribution to make that fund active. [Male Host]: There are also changes to exit fees, is that right Laura? [Laura]: Absolutely. So as of 1 July, there’ll be no cost to exit your super fund, so people don’t need to be you know concerned about those consequences, but they absolutely do need to think about it. So Josh, you said it’s not great dinner conversation, but last night I had a fabulous conversation over dinner about superannuation. And certainly the person I was eating with, was saying they haven’t touched their super account for a few, you know for a couple of years. So they went away to kind of look at what their insurance needs were and if they need to do something about it. So it is a really relevant conversation at the moment and really important ahead of 1 July to engage in your super. [Male Host]: When you were – when you were talking to your dinner friend about superannuation were they nodding off into their soup at all? [Laura]: It was great conversation. I mean we have these conversations often at home. At the moment I have a young daughter who’s super account was closed because it did, she had a low balance, she took some time off work to study and she no longer has a super account, so having that letter come that said you had a little bit of money and now you have nothing was a really interesting conversation So well, you know interesting, interesting at our house Josh. [Female Host]: Dinner and a financial consultation, I like it. [Laura]: That’s right.
[Female Host]: That seems a great Option. Laura what about inactive accounts? Some people who might have had multiple jobs in the past and moved from one to the other and maybe had a super account in each different one… what’s happening with inactive accounts? [Laura]: So inactive accounts with a balance of less than $6,000, so low balance accounts, will automatically as of 1 July go to the ATO. So they aren’t lost, but they will go to the ATO to the lost super or unclaimed super part of the ATO. And they’ll hold it there for you to claim or consolidate. They will, the issue with that is if you, you’re not, earning anything on your investment, you know in that time – so it is important to look at how many accounts you have and if it’s not your intention to have more than one account, you should consolidate. You’ll save a few, you’ll save $500 a year maybe. You know, there is a savings to have that can make a big difference to you in retirement. [Male Host]: In the unlikely event that there’s anyone in Australia watching who’s not as fascinated by superannuation as you are Laura, what is the simple rule of thumb, and I’m including myself as being a complete financial illiterate when it comes to questions like this. What is the very simple thing that we should do either before or after the end of the financial year to get our superannuation in order? [Laura]: Okay, so the first thing Josh is 15, over 50 million people in Australia have super funds which means they’re all investors, right? So you are an investor Josh. You should engage. It’s your money, right? Someone has taken your money from your pay and they’re investing it in something for you. So it’s one of the big shifts is thinking about it as your money, right? But the first thing to do is to log on to the ATO, you know and check to see if you have multiple accounts. I’ve done that myself. I had an old account from my 20’s when I was a waitress somewhere, you know, so I’ve done it, I can tell you it’s easy to do. So the first thing consolidate. But look closely at your account to see if it meets your needs. What insurance do you have? Are you happy with you know the fees that are attached? Does that suit you? People are asking things like what kind of investments is my super fund making. Are they investing in tobacco? Is that important to me that I’m in a fund that doesn’t? I mean there is a lot of interesting conversation to be had around super. [Male Host]: Laura great to talk to you, thanks for being with us. [Laura]: Thank you.

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