Guide to protecting your super
As most people are already aware, a superannuation fund is an invaluable and tax effective way of saving towards your retirements. This method of retirement saving offers peace of mind as well as a range of additional benefits and for many people this is something that will help to make their retirements years more comfortable and more enjoyable, rather than leaving them at risk of having inadequate funds to pay for even basic needs, never mind being able to maintain a particular lifestyle.
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For many people, their superannuation fund is their main security for their future relating to finances, which is why so many people want to ensure that everything is in order with their fund and that their retirement funds are safe and secure. Whilst the fund is controlled by the trustees, many people want to keep on top of information relating to their superannuation fund for peace of mind, as this way they can ensure that they are up to speed on what is actually happening with their finances.
Given the importance and significance of superannuation funds, it is only natural that consumers want to ensure that their superannuation is protected as much as possible, as this fund can have a dramatic impact on their lives in their later or retirement years. There are a number of areas that you may want to know more about in order to enjoy greater peace of mind over the protection and safety of your super fund and some of the common concerns that superannuation fund holders may have are outlined below.
Can money from your superannuation fund be used by the employer?
If you are concerned about the employer being able to use money from your superannuation fund, don't be. The money that is accumulated in these funds is held in trust, which means that it is not available for your employer to use.
What if your employer goes out of business?
There is no need to worry about losing your superannuation in the event that your employer goes out of business because your super fund will be protected even if your employer has to cease operations.
Do the trustees of your super fund have specific responsibilities?
The trustees of any superannuation fund have to make a lot of important decisions and choices but they also need to follow responsibilities as set out by the Superannuation Industry Act. These responsibilities include:
- Ensuring that they always act honestly
- Investing money carefully and properly, taking professional advice if they wish to
- Ensuring that there are adequate reserves in the fund to pay the benefits of the member when the time comes
- Keeping the assets of the fund separate from the employer
- Providing statistics, documentation, statements, etc to enable consumers to see how their funds are performing
- Maintaining accurate records and accounts of the superannuation fund
What are the record keeping responsibilities of trustees relating to superannuation funds?
There are a number of record keeping responsibilities that trustees of superannuation funds need to adhere to in line with the Superannuation Industry (Supervision) Act. This includes the following:
- The maintenance of accurate records in relation to the superannuation fund
- Ensuring that all accounts relating to the superannuation fund are kept up to date and accurate
- Keeping copies of certain reports and maintaining records of trustee meetings
- Ensure that the accounts are audited on an annual basis
- File an annual return with the Australian Prudential Regulation Authority
What sorts of things do trustees have to take into consideration when choosing superannuation funds?
The trustees of superannuation funds have to make some very important and impactful decisions, so it is little wonder that many fund holders are eager to know what the trustees take into consideration when making choices and decisions. Under the Superannuation Industry (Supervision) Act, trustees are asked to take into consideration a number of different things with regards to superannuation funds. This includes:
- Risks and returns: Trustees are asked to take into consideration the risks and the likely returns that can stem from investments taking into account the fund objectives and the investment strategy
- Diversity of investments: The Act asks trustees to consider the variation and diversity of the investments in the fund's portfolio e.g. looking at spreading investments across different asset classes to reduce risk rather than having all of their eggs in one basket
- Liquidity: Under the Act trustees are also asked to take into consideration the liquidity of the investments in the funds based on its cash flow requirements
- Meeting liabilities: Trustees are also required to take into consideration the needs of the superannuation fund in regards to being able to meet its current, as well as its possible future, liabilities