The compulsory system is too complex for many
employees but that could change soon
SPOILT FOR CHOICE
As anyone who has taken an interest
in their super would know, there are
thousands of funds and investment choices
available. Not surprisingly, this is all too
hard for most people and two-thirds of
fund members stay with the default fund
chosen by their employer. How employers
choose default funds varies. It may be
part of an industrial award, contract or
agreement or a different arrangement.
Under recent reforms, default funds must
be designated as a MySuper product, which
is a simple, lower-cost fund with a single
diversified or lifestyle investment option
to ensure members are not paying for bells
and whistles they don’t need.
Employers have been required to pay
your super to a fund that offers MySuper
since January 2014 and if you were
within an existing default fund before
then your fund has until July 1 to transfer
your balance to a MySuper account.
WHAT IF?W Annette Sampson
D
iamonds may be a girl’s best friend
but gold can play an important role in
an investor’s portfolio. Stockspot’s Chris
Brycki says gold is an excellent portfolio
risk-reduction tool. “During times when
assets such as shares are falling, gold often
rises, which helps to cushion the impact of
sharemarket volatility,” he says. “Gold also
acts an insurance policy against your home
currency losing value.”So there is a strong case for holding a
small amount of gold in your portfolio but it
should never be a large part – many experts
say no more than about 10%.
One way to get exposure to gold is to
invest in gold mining companies listed on
the Australian sharemarket, such Newcrest
Mining (NCM) and Kingsgate (KCN),
or through an ETF such as the VanEck
Vectors Gold Miners ETF (GDX).To invest in gold
THE CHALLENGE Ma ria Bekiaris
The precious metal can help reduce volatility in a portfolio
But even so, there are still more than
100 MySuper accounts available and there
is no guarantee members are getting the
best available to them.
Last year the government asked the
Productivity Commission to investigate
how default funds are chosen and it
released its draft report in March. The final
report is due in August and a major shake-
up could be on the way.WHAT IS PROPOSED
One of the problems with the current
system is that each employer you work for
can direct your super contributions to a
different account unless you ask them to
make contributions to a particular fund.
According to the Australian Tax Office,
43% of Australians had more than one
super account in June 2016.
A small minority of these people might
have valid reasons for holding extra
accounts but the Productivity Commissionreckons it is mostly unintentional and
wasteful. The Financial System Inquiry
found that simply addressing account
proliferation and “lost” super accounts
could increase super balances by around
$25,000 at retirement.
A key proposal in the report is that
people who don’t want to choose their
own fund would only be defaulted once. In
other words, instead of each new employer
putting their super into its default fund,There’s a shake-up in
default super choices