LEGALSUPER
Reviewing your annual super statement may lead to higher savings ANDREW PROEBSTL, CHIEF EXECUTIVE, LEGALSUPER
Your Annual Super Statement helps review past performance and plan future actions to achieve your retirement goals.
A
t a time of heightened personal and economic uncertainty due to the COVID-19 pandemic, super fund members are encouraged to scrutinise their Annual Super Statement. Super remains the bedrock of saving for retirement for most Australians and your Annual Super Statement contains a wealth of information. No doubt your Annual Super Statement will be one of many statements or bills you receive, but it is worth the effort to take a closer look at your Statement. After all, super is now the second highest form of savings for Australia, exceeded only by housing. If everything is in order, you’ll get increased peace of mind about your nest egg. Conversely, a quick check may reveal some opportunities to improve your position, and the sooner these are taken advantage of, the quicker your savings may increase or better meet your needs.
WHAT TO LOOK FOR The layouts of statements vary between super funds, but there is minimum information required by law to be included. Some information appears in summary form, with a detailed breakdown shown elsewhere in the Statement. Here are some key actions to consider taking:
22 THE BULLETIN October 2020
COMPARE YOUR INVESTMENT BALANCE Compare your investment balance at the end of 2019/20 to your investment balance at the end of the preceding financial year. This will show you how much your investments have changed over the year. Due to COVID-19 and impacts to the investment markets worldwide, investment returns were lower in 2019/20 and as a result any increase in 2019/20 of your super balance is more likely to be lower than that of previous years. By way of example, according to SuperRatings (an independent super research and rating advisory business) the median return for a ‘balanced’ investment option for the one year ended 30 June 2020 was -0.8%.1 Super exists to provide savings for retirement. One of the easiest ways to assess whether you’re on track to be comfortable in retirement, is to use your super fund’s tools and calculators. legalsuper’s Retirement Income Forecast calculator, is an excellent starting point as it helps you project your possible retirement income and explore options for improvements.2 To help determine whether your retirement income target will set you up for the lifestyle in retirement you envisage for yourself and your loved ones, it is helpful to compare your retirement income target to the Association of Superannuation Funds of Australia (ASFA) Retirement Standard. The Standard benchmarks the annual budget needed by Australians to fund either a “comfortable” or “modest” standard of living in the post-work years of those aged around 65 and those aged around 85.
The latest Standard, issued for the June 2020 quarter, states that in retirement, a single person aged around 65 will need $27,902 per annum to lead a “modest” lifestyle and $43,687 per annum to lead a “comfortable” lifestyle. Couples aged around 65 years will need $40,380 per annum and $61,909 per annum respectively. (These figures assume the retiree/s own their home outright and are relatively healthy).3
CHECK WHERE YOU’RE INVESTED Your Annual Super Statement must show your investment choice. It’s important to periodically assess the level of risk and return you’re comfortable with and ensure your investment choice is aligned. legalsuper offers 13 investment options, including the ability to selfmanage your super with our Direct Investment option. This SMSF-style alternative offers the flexibility of real time trading, for those who want to be more hands on with their investments. As a result of the economic impact of the COVID-19 pandemic, super funds have, understandably, received an increase in inquiries from members about the impacts to their super, including whether they should change their current investment option(s). legalsuper’s members are to be assured that the fund’s highly experienced investment experts continue to actively monitor and respond to changing market conditions. Also, history tells us that economic downturns are temporary, as markets have demonstrated the ability to recover losses after a crisis. For example, despite share
