Opinions on Superannuation change, and what do you look for in Super?

AdosHouse on 23/05/2019 - 13:22

Okay so like quite a few on here, I took the offer for opening a Australian Super account for the QFF points. Now I am having a look at whether they are worth swapping too.

I am currently with Intrust Super, was my first Super account when I started working in bars, now it has $77k in it.

Intrust Charge: 0.84% Investment fees, $1.75/week in Admin fees, and 0.15% in Indirect Admin fees.

Australian Super: 0.66% Investment fees, and $2.25/week in Admin fees.

So alone this makes it $646.80 in fees for Intrust and $508.20 for Australian Super.

I also have Death, TDP and Income Protection with Intrust. $300k Death, $300k TDP, and 21 day/90% pay Income Protection. This comes to $616 a year in premiums.
Equivalent insurance with Australian Super would come too $686 a year. But if I become more reasonable with insurance, and drop the death to $100k (32yo, single, no dependents), leave $300k TDP and change Income Protection to 60 days waiting (I have 10 weeks of sick pay built up), the total insurance premiums come down to $397 a year.

So total fees and premiums for Intrust are $1469.30 a year, whereas with lesser insurance with Australian Super would be $1022.20 a year.

The returns for the investments choice looks like this
Intrust Australian Super
1yr 6.15% 11.08%
3yr 9.35% 9.30%
5yr 8.46% 10.51%
7yr 8.46% 9.92%
10yr 8.97% 7.31%

30 year average for Australian Super for Balanced is 9.71% which is pretty good. No equivalent data for Intrust.

What do you guys think? Swap or stay? And what do you look for in a Super company? Pure returns, etc?

Financial Superannuation

Comments

  • [Deactivated] on 23/05/2019 - 13:32
    +2

    I'd want to see more double digits than those. I'd swap. HostPlus has been really good, at least worth a comparison.

    • jimbobaus on 23/05/2019 - 15:15

      This!

    • AdosHouse on 23/05/2019 - 22:04

      Thanks I'll have a look.

  • brad1-8tsi on 23/05/2019 - 13:44

    Past performance blah, blah… I put my Super in MTA Super in 2007. #1 performer for the previous 10 years - then it turned out their direct investment valuations had been very optimistic. 30% drop in 3 months.

    I did the comparison last year. Was with First State Super and fees were looking high. I dumped the insurance long ago as I didn't see the point for my circumstances.

    I used the comparison tool on Australian Super's web site and would have saved $1.5k/yr in fees. Almost changed but then FSS changed there fee structure and there was only a a few hundred in it.
    I then changed my investment structure to a more targeted mix rather than the high growth / growth options I had. High growth management fees are 0.91% whereas Au/Int equities are 0.1%. The fees have come down a lot.

    If I hadn't had these changes I would have gone to Australian Super.

    • DarthAntz on 23/05/2019 - 16:16

      I also dropped the insurance, as its pointless for my circumstances. Start here.

  • Diji1 on 23/05/2019 - 14:06
    -3

    drop the death to $100k (32yo, single, no dependents)

    If you have no dependents and are single why are you paying for life insurance?

    I think Australians are morons participating in forced scam called superannuation where they lose over $600,000 of their forced investment because of unneccessary fees that earn the superannuation industry $15,000 over their working life.

    • bpop99 on 23/05/2019 - 14:18
      +5

      Superannuation is in my view the best financial decision any government in power has made.

      Could it have been implemented better? Definitely.

      But this does not negate the fact that that people with higher super live better post-retirement lives and that we should encourage everyone to contribute as much as possible to it.

  • bpop99 on 23/05/2019 - 14:13
    +3

    I did quite a bit of research before I opened mine, but even then I made mistakes along the way. I'm in finance too, so I have to say, its not as straightforward as it seems.

    There are 2 key factors that are important in determining your returns - the actual performance of the fund and the fees that you pay.

    The first fee you need to consider is any variable fee, as these are unlimited (as in its applied to every dollar you have contributed). The lower the better. If you are a low earner, any fees that you pay form a significant portion of your contribution, and you should consider all fees. If you're a higher income earner, fixed fees don't really matter as all of them are fairly low proportionally.

    The next is returns - funds that return more over a long period of time will grow your retirement by a higher amount. Historical returns are obviously not the best indicator of future performance AND you need to take returns against benchmark (instead of absolute returns, which are the numbers you have) AND you have to compare along the same time frames. Unfortunately, there is no easy way out of this, and so comparing absolute long term returns of one fund against another is a fair enough proxy (say 10 year returns). Don;t worry about 30 year returns - I'm sure Australia today is not like Australia in the 90s, and I'm pretty sure probability of high rates like those times are quite low.

    Lastly, insurance plays a significant factor if your contributions are in the mid to low range and can significantly curtail your contributions. The one I personally recommend to all is TPD, which is total permanent disability. This is payout in case you are disabled in any way, and can be a huge help in case of disabilities. Death insurance is useless to you. Once you're dead, its not your problem anymore. Rather, if you have dependents, then you should consider this. Income protection is this grey area where I think most people who would benefit from it probably may not qualify, for example - if you have casual or contractual jobs, this is likely not to apply. It should be based on circumstances and my feeling is that unless you will be absolutely dire in case of a sudden job loss (ie, one income family) this is probably too much of a cost to your retirement savings.

    Based on the above information, you should choose the one that has the highest return for the lowest fees. If you have a mixed bag, with low contributions, go with the one with the lowest fees. If you have higher income, the math may be a little more muddy but fees are always the hidden killer people fail to consider.

    Now in your case, which is better? This is a simplification, and generic view (also I'm not a financial advisor) but I'd say in your case, you are paying 50% more variable fees today. While 10 year returns are 22% higher, this is not something guaranteed to continue. This theory is supported by the varied performance of the shorter term returns. Your biggest change though will likely be removing any non-necessary insurance whichever super you go with.

    • AdosHouse on 23/05/2019 - 22:07

      A lot of good info there, thank mate.

  • [Deactivated] on 23/05/2019 - 14:39

    I believe that accessing super life insurance isn't as easy as it sounds if you don't have dependents. If your mum is nominated as your beneficiary, it might not be as useful as you think.

    This is from insurancewatch: "If you have not made a nomination, or your nomination is invalid (e.g. because your beneficiary is not a financial dependant), you cannot assume that the super trustees will automatically pay your super death benefit to your estate. The trustees will use their discretion to distribute the funds and this could result in the money not going where you intended. "

    It aligns with what I read when I dropped life insurance, as many people who had non dependents listed as a beneficiary wrongly presumed the situation was straight-forward.

    • bpop99 on 23/05/2019 - 16:21
      +1

      You are right, and infact, even the 'good' ones like Aussie and Hostplus may have these onerous terms. Thats why I choose to only take TPD with my super - expectedly, this payout will only happen if I'm still alive after getting some form of permanent disability.

      edit: removed note on who manages these insurance schemes as I'm actually not sure now…

    • Cheap Steve on 24/05/2019 - 06:27

      If you don’t have any dependents then super life proceeds will be paid to your estate to be distributed by your Will. If you don’t have a Will then intestacy laws will apply. Bottom line, have an up to date Will and you will be fine.

      • [Deactivated] on 24/05/2019 - 08:57

        There are also big tax issues to consider for non-dependents that the estate is expected to deal with. It's far from the easy money many people presume. It's a logical cost to consider closing if you have no dependents.

  • altomic on 23/05/2019 - 14:52
    -6

    superannuation is a pyramid scheme

    • [Deactivated] on 23/05/2019 - 15:18

      Then please add my name as the "beneficiary" of your super account. I will happily bear the burden.

  • dcep on 23/05/2019 - 14:54

    life insurance - for who ?
    TPD - workcover
    income - centrelink

    hostplus indexed balance - 0.03% fee + admin $78 per year

    performance / returns - compare it yourself

    • AdosHouse on 23/05/2019 - 22:10

      Life insurance - True
      TPD - If it happens at work. What about any other time?
      Income- Centrelink is the biggest mess-around in Australia, and I would rather not have to rely on it.

      I'll have a look at HostPlus, cheers.

      • brad1-8tsi on 24/05/2019 - 07:54

        TPD - If it happens at work. What about any other time?

        You should read the terms of your TPD. It isn't workers compensation.

        Workers Comp covers you at work.

        TPD should cover you at all times. The question is, what will qualify you as TPD?

        Here was my logic on not having any insurance:

        Death: My death cover was ~$50k. I had no debt. I have 2x teenage children. Divorced. No debt and enough assets to cover any costs of winding up my estate. Death insurance was useless.

        TPD: We have a health system. I have "some" assets. I've made it quite clear to my family and friends that if I'm in a position where i can't look after myself that they should facilitate my death in whatever means possible.

        Income insurance: I have a reasonably secure job, transferable skills and the ability to start a business if i need to. I have some savings and no debt.

        Regarding beneficiaries.
        Please make sure you make either a binding or non-binding nomination of beneficiaries of the actual Super balance. You can do a non-binding online but it expires periodically (3 years?) and can be contested. A binding nomination has to be done on paper and witnessed but is a strong enough document that it over-rides your Will.

        • AdosHouse on 24/05/2019 - 12:18

          Good points there.

  • Skramit on 24/05/2019 - 09:42

    Pro Tip: Check with your TPD insurance if it's for "Any Occupation" or "Own Occupation".

    Any Occupation: They wont pay out if you can be re-trained to to any occupation eg stack shelves at Coles. This TPD coverage sucks because its rare they will pay out unless you're a total vegetable. This is the sort of TPD cover most super funds have as their standard TPD insurance product.

    Own Occupation: Pay out if you are unable to do your normal occupation or something of a similar nature. This is much better coverage for TPD. You pay a bit more but IMO it's worth it for most professions.

    • AdosHouse on 24/05/2019 - 12:18

      Thanks, I'll have a look.

  • EndM11 on 24/05/2019 - 23:36

    Be careful about if "Balanced" is really balanced. I think CBUS and Hostplus are most guilty of juicing up their "Balanced" options with a lot of infrastructure and property allocations, this works due to liquidity premium and rising markets but ironically will quickly become the worst performing funds in a downturn since their "Balanced" isn't really all that balanced at all

    It is insane how there are some funds with like 20-30% higher allocations to defensive assets than others and yet they're ranked on performance and both advertised as the exact same thing. No two balanced super funds are the same.

    • AdosHouse on 25/05/2019 - 02:10

      Yeah I'm currently working out the balance of investments between, Intrust, AusSuper, and HostPlus. Seeing what the breakdown is.

      • poormansfriedchicken on 15/06/2019 - 21:00

        Looking to open my first super account, alot of good points have been made. Have you made a decision on which super you think is the best?

        • AdosHouse on 15/06/2019 - 21:45
          +1

          I went with Australian Super because of their lower fees and I liked their investment breakdown better.

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