Assessing your Superannuation during COVID-19 Pandemic

Amidst recent market fluctuations caused by the COVID-19 pandemic, there is heightened public awareness of individual superannuation fund performance, which has caused reactive and impulsive decision-making.

When it comes to your super, there is no need to panic. Making reactive, knee-jerk decisions will likely only lead to unfavourable long term outcomes. Instead, use this time to better understand your super and make better-informed decisions.

To help ensure a strong recovery for your investments, have a read of this guide with some key areas you should consider when assessing your superannuation.

How has your super fund performed over the past five years?

Do some research into the history of your super fund. Has it performed well over the past five years? 

You might compare your current superfund with the five-year performance of a competitor to determine whether your super fund is performing favourably.

Some things to look at include steady growth of investment performance, net returns after fees and your fund’s ability to withstand unfavourable conditions. 

Although these are indicators about a super fund’s health and past performance, it should not be viewed as solid future predictions.

In this case, there are other factors that coincide with assessing your super fund.

How much are you paying in fees?

We understand that it can be extremely confusing and time-consuming to try and navigate your superannuation in response to market conditions. However, one area that remains largely in your control is fees.

Ideally, your total superannuation fees should be 1% or less. If your fees are higher than 1% you might consider switching super funds. 

However, you should consider any substantial fees that might be incurred in doing so. Before making the decision to switch, you should also take into account a range of other factors that could impact your decisions, such as:

• Fund performance
• Risk level
• Extra benefits
• Insurance

It is also good practice to keep informed about changes in fees as even a slight increase can end up costing you a large amount of your retirement savings. 

Is your risk-level right for you?

Super funds often make investment decisions on your behalf to save you doing so yourself. 

Although this can be helpful, it is also best to check in on your investments from time to time to ensure the risk-level is still right for you.

Are you normally a risk-taker and prefer high rewards with the possibility of larger losses? Or are you more conservative when it comes to your retirement savings?

Either way, it comes down to your individual comfort with risk. 

For younger generations, retirement is likely to be a long way off meaning there is more time to experiment with high-risk return strategies.

However, for older generations, it is recommended to invest in more conservative return strategies. This might mean less exposure to market fluctuations, especially during the uncertain times we are experiencing.

Often, super funds allow you to allocate where your super is invested. This way you can customise your super to the risk-level strategy that’s right for you.

What are the extra benefits?

Competitive super funds offer added benefits to attract new members. Some extra benefits are:

• Discounted insurance cover
• Protection against bankruptcy
• Ability to invest in large assets
• Travel insurance

Extra benefits available to you will be dependent on your membership with your chosen super fund. Any entitlements to added benefits should be made clear to you through the product disclosure statement provided when you joined. 

Do they offer competitive insurance cover?

Typically, super funds offer members three types of insurance:

• Life cover
• Total and permanent disability insurance
• Income protection insurance

To determine whether your super fund’s insurance covers are competitive, you should compare the types of insurance available and the cost of cover.

You can also compare your super fund insurance policies with independent insurance companies to ensure you are covered by the right policy for you.

Learn more about your Super

Superannuation can seem complicated but it is our job to help you understand your investments to make the best decisions for you. 

Speak to us to find out more about how your superannuation investment fund is structured, whether you should be making changes to your superannuation investment portfolio and to better understand how market fluctuations impact performance and investment structures.