How do I choose the super fund for my salary sacrifice? I can salary sacrifice for additional super up to $13K. Which fund should I use? I'm looking for low risk option with index fund or similar...
Top answer provided by:
Ben Matusch
Hi Henry
Thanks very much for your question.
Firstly, may I congratulate you on taking an interest in your superannuation as unfortunately many Australian’s don’t do so until it is often too late to make any meaningful impact on their retirement savings.
Without knowing your full details it is difficult to be precise, however, generally speaking all, open to the public, superannuation funds could accept your salary sacrifice contributions. It is highly likely that your existing fund into which your employer is paying the mandatory 9.5% superannuation guarantee would also be able to accept your salary sacrifice contributions. You could check this by contacting your fund. As a general rule it is not advisable to have multiple superannuation funds as this can result in a duplication of fees and charges.
In regards to seeking a fund with low risk options, again the majority of funds provide a broad range of investment choices to satisfy the needs of their clients. Without knowing your particular circumstances I am unable to make any recommendations regarding specific funds.
I would however strongly encourage you to seek advice from a qualified financial adviser for three very important reasons.
Firstly, they will undertake a fact finding process to understand your current situation and ask a series of questions regarding your retirement goals and objectives. This will help them to determine the time horizon you have to work with and the level of retirement funds you might need to meet those goals and objectives.
Secondly, they will undertake what is commonly referred to as a risk profiling assessment. This involves some further questioning and discussion about your thoughts and will give them some insight into what you mean by “a low risk option”. There is further value in this discussion as often there can be a mismatch between what a client is seeking to achieve with their retirement savings and the level of risk they are prepared to take towards achieving it. A financial adviser will be able to discuss this with you and outline any options that you should consider to meet your retirement objectives.
Lastly, armed with the above information a financial adviser will be able to guide you as to the type of investment options and superannuation fund that will best meet your needs.
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"Hi Henry, you have asked a very important question and the answer to your question will in part be determined by whether you need a hand or want to go it alone. As you know there is an enormous amount of investment choice and it is difficult to work through all the options in the totality of your entire situation. I make no secret in my strong belief in the case for the use of index funds but there are many opposing views in this area on ways to invest. As you are from the ACT, depending on who you work for and the super scheme you are currently a member of, will determine the level of superannuation support you receive and the cap you have available. If you are in the Public Service in one of the old Defined Benefit Super Schemes then there is already some complexity that will increase next financial year with the introduction of "notional" employer superannuation contributions. If you are seeking assistance then you should think about the level of support you are seeking and how much you are prepared to pay for it. Once you have this clear in your mind then you are ready to make some enquiries. I would suggest five tips: 1. think holistically before determining your specific options and a great way to do this is through a financial advice health check, This might help you work out what you don't already know. 2. find someone with experience that you think you can trust, 3. find someone who is prepared to charge you a reasonable fee for the services you require, 4. think very very carefully about the level of risk you are prepared to take with your investments, and 5. find an investment solution that has solid long term performance and is extremely cost effective as high fees can severely erode long term financial outcomes. www.financialadviceshop.com.au General Advice Disclaimer Note: This advice is of a general nature only and does not take into account your personal situation and all of your objectives, your financial situation or needs. Before making any decisions you should seek advice from a professional, qualified financial adviser."
William Waller 00:36 on 20 May 17