This article is authored by Jessica Chambers and is originally published by Mamamia.
Like most of us, Gen Hallot wasn’t too concerned with her super.
The New Zealander, who was living and working in Australia for several years, thought she could set and forget her super fund account and it would steadily grow without her interference.
However, the 33-year-old had a massive shock when, five years after she’d relocated, she realised her super account balance had been dwindling instead of increased in that time.
Determined to find out why, Gen discovered a hidden fee had been zapping her super account of $109 month – meaning over the course of five years she’d lost more than $5000.
And we don’t mean to alarm you, but it’s a fee many Aussie workers are unwittingly paying right now.
You see, as Gen discovered, many super providers include an opt-out life insurance policy in their service – or one that customers unknowingly opt-in to when they sign up.
Meaning that unless you cancel that life insurance policy, you are paying monthly or quarterly fees for it. And if you’ve got no dependents or debts, that’s a service many of us really don’t need.
Gen also learned that just because she never asked for the policy, didn’t excuse her from paying it.
“I was completely taken by surprise. I tried to stay calm and picked up the phone to [her super provider],” she said.
“I thought ‘I definitely didn’t ask for this policy, so when AMP can’t prove I asked for it to continue when I left my employer, they’ll probably have to refund these fees’.”
But a customer service representative explained to Gen that no permission was required.
“I was extremely frustrated. These were my savings that a company seemed to have carte blanche to dip into!”
Then Gen had a worrying thought – what about her other super account? Sure enough, she found another super balance being slowly shrunken by life insurance policy fees.
“Here it was harder to see the exact monthly fees but I again could not believe it. This policy has been in existence since about 2004 I think.
“I’d hate to know what I’ve paid in insurance fees over the last 14 years.”
Gen said she didn’t believe the opt-out insurance policy was in the customer’s best interest, which as we’ve been learning through the banking royal commission this week, is a fairly common complaint.
On Wednesday the inquiry heard that National Australia Bank’s superannuation trustee has continued charging advice fees after customers after they had died.
The fees for advice – when no advice was provided – were taken from the member’s account even after the trustee had been advised of their death.
The commission has also heard this week that living NAB customers had been charged fees with no services provided.
These problems may be addressed when the banking commission hands down its report, but in the meantime, workers can do something about the insurance fee they’re most likely paying.
Gen’s advice? Log in to your account, see if you’re paying for insurance – or something else you don’t need – and if you don’t want it, call up and cancel it.
But there are other things to consider about your super account – like what kind of ethically questionable businesses you may be unknowing supporting.
Zuper CEO Jessica Ellerm has shared her four steps to getting your super under control:
1. Check how many accounts you’ve got
Forty per cent of Australians have more than one account. Which means you’re likely to be paying multiple sets of fees for super and multiple sets of fees for insurance policies. For young Australians, ASFA estimates that could be putting them out of pocket $300 per year per extra account. It’s even worse if you’re older, because fees are often a percentage of your balance, and insurance premiums get more expensive as you age.
What to do: Online funds like Zuper connect to the ATO to find your accounts and help you combine them, without paperwork. You can also create a myGov account and search for your super there too.
2. Log into your account and find out if you’re invested in cash or not
If you’re young, nearly every expert and advisor will tell you not to have your super invested in cash only. Unfortunately, super system quirks can happen – like dead people being charged fees – and left unattended, could lose you thousands of dollars in potential returns over your life.
What to do: Log-in and download your statement. It should tell you how the money in your fund is being invested. If it doesn’t look right, get a coffee, settle in and call your fund and ask them to explain. That’s what you pay them for after all!
3. Find out what your money’s supporting
Love tobacco, controversial weapons, cluster bombs and nukes? Yeah, we didn’t think so. Only 28 of 53 super funds surveyed have removed tobacco entirely, meaning your dollars are very likely heading that way. If you’d rather not have your hard earned dollars fund cancer stick production, and it’s estimated seven million related deaths per year worldwide, you might want to consider moving funds.
What to do: Visit your fund’s website to find out if they’re in or out, or drop them an email to ask what they’re doing about it
4. Support things you do care about
You don’t need an expensive Self Managed Super Fund and tons of money and time to invest your super in things you’re passionate about. Many super funds now let you put a portion of your super into investments picked by you. If you’re not comfortable with picking stocks directly, a few funds now offer options that bundle similar investments together in health, technology and renewables.
What to do: Ask your fund what the options are, or check out some of the new providers.