- Superannuation or super is the retirement fund that pays for Australians to retire.
- There are several issues with superannuation including the rules that keep being changed, and not being able to earn super unless you’re working.
- Even though super is something we love to hate, you need to get interested in it because it’ll be one of your biggest financial assets.
Do you understand how superannuation works in Australia?
Superannuation is how people retire in Australia. If you’ve worked in Australia, chances are that you have at least one super account. You might even have more than one if you’ve worked at multiple jobs.
We assume that the superannuation retirement system has been around forever.
However, superannuation has only actually been around since 1991 when the government created the Superannuation Guarantee. Super is far from perfect and there are several things I absolutely loathe about super. 10 things I hate about it in fact.
Here’s 10 things I hate about you, superannuation:
1. I hate that you keep changing the rules
Superannuation was introduced to help pay for the Baby Boomer generation’s retirement. However, changes by countless governments mean superannuation is now a financial Frankenstein’s monster. Make sure you check the Australian Tax Office (ATO) website every year so that you stay up to date with any changes.
2. I hate that you don’t work for me unless I’m working
You only earn money towards your super if you’re undertaking enough paid work. It’s still predominantly women who take leave from work to raise children and they miss out on super contributions during that time.
3. I hate that I have to think about you when my first concern is keeping the lights on
Sole traders or small business owners are primarily concerned with making enough money to pay their bills and suppliers. Their second concern is taking a salary that covers their living costs. It’s a successful small business owner who then is able to cover the third priority of superannuation and this means many people who work for themselves aren’t actively planning for retirement.
4. I hate that it’s up to me to consolidate your accounts
Many of us will have multiple accounts, particularly if you’ve worked in several part-time jobs while studying. Those multiple accounts mean fees steadily reduce your balance but it’s up to you to consolidate them. Many of us lose money because consolidating our accounts is less appealing than watching Netflix and we procrastinate actually doing something about it.
5. I hate that I can’t actually meet you until I’m 60
Superannuation is one of your biggest assets that you can’t do anything with until you turn 60. You can only get early access to your superannuation in extreme circumstances but you might have a better use for it now, such as using those funds to pay for your first home and growing an asset, like this young couple did.
6. I hate that you don’t well work for me if I rely on commissions
Many professions like real estate work primarily on commissions. In these situations, you might need to contribute to your super yourself to ensure you have enough money to retire on.
7. I hate that you’re seen as the only way to fund my retirement
Diversifying your retirement assets can mean you’re not relying on your super alone to retire on. You may wish to consider buying a home and paying this off before you retire or investing in a range of stocks. That way you’ll lose less sleep over market fluctuations.
8. I hate that you aren’t covered by my will
Superannuation is not automatically part of your estate. Depending on whether you make a binding or non-binding request, you might not get to decide who gets your super when you die. If you don’t want to leave it up to chance, make a binding nomination and ensure it’s covered by a current will.
9. I hate that you can’t come travelling with me
Unless you’re moving overseas permanently, you can’t take your superannuation balance with you. You also can’t access super until you turn 60 if you’re born after 1964 or qualify for early release.
10. I hate that you aren’t upfront about how you spend my money
While many funds are moving towards ethical retirement fund investments, transparency is still lacking. Many funds give money meant for your retirement to political parties, or invest in fossil fuels. Australian super funds need to be better at investment disclosure so that you know where your money goes.
But mostly I hate the fact that you’re a trillion-dollar industry in Australia that still can’t function effectively for many of us.
We would love to have more transparency and greater control over our superannuation accounts. Even though we love to hate super, it’ll still likely be one of your biggest financial assets so you still need to monitor it and take an interest. Even if you hate it, future you will thank you for caring.