ASIC COO Warren Day called on Australians to actively engage with their super in order to prepare for retirement.
In a recent interview with the ABC, Mr Day said retirement outcomes depend significantly on when individuals start planning and whether they have accumulated enough wealth over their working lives.
“While the super isn’t the only source of retirement savings – money can also come from investments, government benefits and your home, if you downsize – it’s the single most important asset for many many Australians,” he said.
“So it’s important that people actively manage their super and check the performance of their fund.”
The median balanced super fund ended the 2021-22 financial year down 3.3%, the third-lowest return since the super guarantee was introduced in 1992. The country’s largest super fund, AustralianSuper, also reported a negative return for its balanced option.
However, Mr Day suggested that individuals should look beyond the last financial year when reviewing the performance of their super.
“You can consider switching funds if your fund is consistently underperforming – but you need to take a long-term view,” Day said.
“Super fund returns will most likely be lower this fiscal year after strong returns last year, you need to look at performance over a number of years to get an accurate picture.”
He said members of MySuper products should check their fund’s performance using the ATO’s Your Super comparison tool, which incorporates the results of APRA’s annual performance test.
The test was to be expanded beyond MySuper products this year before the federal government announced earlier this month a review of the Your Future, Your Super laws and a pause in the expansion.
Mr. Day also encouraged individuals to ensure they are in the right investment option for their risk tolerance, which would likely be affected by the proximity of retirement.
“Think about the level of investment risk you are comfortable with. A higher growth option will carry higher risk and experience more volatile returns in the short term,” he said.
“But it will generally lead to higher returns over the long term. A conservative option, such as cash or bonds, will offer lower risk but lower returns over the long term.
Jon Bragg is a reporter for Investor Daily from Momentum Media, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.