Members of corporate super funds are now receiving information packs on the Labour Government’s superannuation reforms called “MySuper”. Many of our clients have told us that they do not understand MySuper, its implications for them and whether or not they should allow themselves to be automatically transitioned to it.
What does it mean?
In a nutshell, if you have not selected a fund into which you want your employer to pay your super or if you have not selected specific investment option in your company super fund, then you will be moved into a low-cost investment option called MySuper. As ASIC says on their website, “picking the right super account is important no matter what your age. How your money grows will affect the lifestyle you have in retirement.”
How do they make a low-cost investment option?
Generally, the way to reduce cost is to reduce the features available to you. A common approach (although not universal) has been for superannuation providers of MySuper to stop actively managing your portfolio and use passive funds. If you are going to be put into a MySuper option, you should check if this is the case for you and if you are happy for that approach to be taken with your super.
Would we recommend My Super?
It depends on your circumstances, but if your MySuper option uses only passive funds, then you are at risk of missing out on the potential return from active management. We (at Blueprint Wealth) believe that in most asset classes you can achieve better risk-adjusted returns over the long term by with active management.
What are your options?
- Do nothing. Your super will be moved into the low-cost MySuper option.
- Make your own investment selection inside your super fund.
- Contact us and we can advise you on how to build and maintain an investment portfolio tailored to your specific circumstances.
For more information on MySuper, go to the ASIC MoneySmart website.
David Baruffi is a director of Blueprint Wealth and has over fifteen years’ experience as a financial adviser.
Blueprint Planning Pty Ltd (ABN 78 097 264 554) trading as Blueprint Wealth and David Baruffi are Authorised Representatives of AMP Financial Planning Pty Limited
Disclaimer: This article contains general information only. It does not take into account your objectives, financial situation or needs. Please consider the appropriateness of the information in light of your personal circumstances.