Hey, just how bad can a super fund be? Believe me, you have no idea.
Some super funds from the 80s and early 90s are nothing short of criminal. Yes, criminal. I’ll go one step further. Some 80s superannuation executives should be awaiting their final meal on death row for crimes against their customers, a la Sean Penn in Dead Man Walking.
Think I’m kidding? How about locking in customers to management fees of 7 per cent-plus, then overhanging that with HUMUNGOUS exit fees in case they try to leave. El bastardos!
There is no justification for it. These funds still exist and are largely still run by household name institutions.
So, yes. Some people must change their super funds.
Gen Xers will, largely, have escaped these death funds (though some older Xers copped it), where you literally can’t get ahead because of fees.
Obviously, you don’t switch funds just for the sake of it. What should you consider?
Fees, sure. Low-cost fund options that will provide you access to the investment options you need. Xers should aim for higher growth, because we’ve got time on our hands.
But more importantly, make sure your superannuation fund provides the insurance you need, particularly life and TPD insurance, to protect yourself and your families in case the unthinkables occur. We can’t always escape like Mr Magoo.
Xers should consolidate unnecessary funds, but not before insurance has been considered. Go ahead and do it. But if you don’t know what you’re doing, make sure you get a reputable financial adviser involved.
Bruce Brammall is the author of Debt Man Walking (www.debtman.com.au) and principal adviser with Castellan Financial Consulting.