Your superannuation is the main way of saving for retirement. Given the importance of your super, it's important to make sure it's protected and be sure that it's in good hands. Luckily, the Australian superannuation sector is heavily regulated.
Protecting Your Super legislation
In 2019 the government introduced new legislation called the 'Protecting Your Super package. This legislation was introduced to try an stop young people, and people with low super balances, from having their super eaten away by fees and charges.
Here's what's included in the legislation, and why:
Inactive super accounts closed
If your super account balance is less than $6000 and hasn't received a contribution for 16 months it will be deemed as 'inactive'. If your super is deemed as inactive the money will be sent to the ATO and the ATO will try and track down your current super fund instead, where it'll send the money. Then, your inactive account will be closed. This is to prevent your super being eaten away by fees if you've since opened a new account and forgotten about it.
Inactive insurance cancelled
If your account is inactive (that is, hasn't received a contribution for 16 months) the fund will also need to cancel your insurance and stop charging you insurance fees.
Cap on annual fees
If your super balance is less than $6000 there will also be an annual cap on the annual fees, so they can't be more than 3% of your account balance. Again, this is to prevent your balance being erroded by fees while you might not be working, earning a low income or taking time out of the workforce.
However, annual fees of 3% is still very high, and you should be looking for a super fund that has fees less than 1.5% of your account balance.
No exit fees
Super funds are no longer allowed to charge you an exit fee if you want to leave the fund. You can change super funds at any time, with no fee to do so.
Super stapling
Your super fund will be 'stapled' to you and come with you from job to job. Previously, you could open a new super fund every time you started a new job. This would result in many people having several super funds in their name, and several sets of fees to pay. Now when you start a new job you will take your fund with you, unless you want to switch.
Common questions regarding the safety of superannuation
Can money from your superannuation fund be used by your employer?
If you are concerned about your 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. Your super fund will be protected even if your employer has to cease operations. Super is completely separate from your employer, and the money is managed by the super fund.
If the economy is bad, will I lose all my super?
Your super is one big investment portfolio. So yes, when the sharemarket is down this means your super will be too. However, super funds are very diversified and invest in a lot of different things, not just shares. Your super is also invested in things like property, infrastructure, commodities like Gold and Silver and private investments. This helps to minimise your losses as while one market might be down, another market will be up. Another thing to remember is super is a long term investment. While you might have some years of poor performance due to the economy, over the long term it'll keep going up.
Finder survey: Which sectors would Australians like to see their money invested in?
Response
Renewable energy
48.23%
Healthcare and education
33.33%
Innovative technology and sustainable products
29.79%
Environmental conservation
26.95%
Socially responsible businesses
21.28%
Recycling and waste management
17.73%
Fair trade and responsible supply chains
15.6%
Clean efficient transport
14.18%
None of the above
13.48%
Green real estate
8.51%
Cultural and creative industries
4.96%
Other
0.71%
Source: Finder survey by Pure Profile of 1016 Australians, December 2023
Tips for protecting your super
Keep your account log in details secret and don't share these publicly
Check your payslips regularly to ensure your employer is paying the correct amount of super into your fund
Check your superannuation statements regularly to ensure you're not being overcharged any incorrect fees
Lastly, compare super funds to make sure you're not paying more in fees than you need to be.
Finder survey: Which sectors would Australians like to see their money invested in?
Response
Renewable energy
48.23%
Healthcare and education
33.33%
Innovative technology and sustainable products
29.79%
Environmental conservation
26.95%
Socially responsible businesses
21.28%
Recycling and waste management
17.73%
Fair trade and responsible supply chains
15.6%
Clean efficient transport
14.18%
None of the above
13.48%
Green real estate
8.51%
Cultural and creative industries
4.96%
Other
0.71%
Source: Finder survey by Pure Profile of 1016 Australians, December 2023
Disclaimer: Performance, fees and insurance data is based on each fund's default MySuper product. Where the performance, fees and insurance data for the MySuper fund vary according to the member's age, results for individuals between 40-49 years of age have been shown. This article is general advice. You should consider your own personal circumstances before deciding if a superannuation product is right for you. Superannuation is a long term investment and past performance is not indicative of future performance.
Alison Banney is the money editorial manager at Finder. She covers all areas of personal finance, and her areas of expertise are superannuation, banking and saving. She has written about finance for 10 years, having previously worked at Westpac and written for several other major banks and super funds.
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