Monday, December 4, 2017

The changing space of the public servant's "safe" superannuation funds

Most Government employees that I work with are employed by the State Government as teachers and nurses. These clients will often report to me that their Superannuation accounts are "incredibly safe" because it is Government superannuation. Unfortunately, this misnomer is no longer correct. Yes, if you have a Defined Benefit, then your superannuation is underwritten by the state, and in Queensland it is in strong position (check out the actuarial report here), but if you are in an Accumulation account, then you are in the same boat as the rest of us. Sure, you still get 12.5% in contributions, as opposed to the measly 9.5% the rest of us get, but that is your only advantage as you are in the same system as those working in private enterprise, and are subject to the same market movements and vagaries of trustee decisions.

Sorry...what? I am a nurse at the base hospital, and you're telling me that my super is no different? That it isn't safer? Yes, that is exactly what I am saying. You, as a Government employee, used to live with this security blanket that your superannuation would be as "safe as houses". The reality is that this no longer exists. That secure system has been dismantled because it was costing too much money, so from now on in, you had better pay attention, otherwise, you may find that your "safe house" was actually located in a town like Moranbah.

So, now that you know, what do you do? Well, option one, which I don't recommend, is that you can put your head in the sand, and keep parroting that "it is the best super out there", because Joan in accounts said so, and she has been with the Government for 40 years (and, by the way, probably has a Defined Benefit account), or, you can start to educate yourself on what you actually have.

In educating yourself, look for the the things that matter. The things that matter are, your risk profile, the asset allocation you are in, the investment choice that is available, diversity of investment managers, how the managers invest your money, the liquidity of the assets, the transparency of the fund, the ease of access to reporting, the insurance cover. What about the return, I hear you ask. Well, if you get these right, then the return will follow. It's when Lehmen Brothers 2 hits that you be thankful that you looked at your superannuation fund with more scrutiny than Joan suggested.

If you do all of this, and you're satisfied that you are still in a good spot, then happy days! If not, then please get yourself to a Financial Planner, and go over it with them. Still doubting? Well, I'll need to pull out the conspiracy theory that I've heard bandied around the employee campfire more than once, the Government never changes things unless there is an advantage to one thing...the Government.

Find Erin* at Achieveit Financial Planning, or call for an appointment on 07 4638 5011.
*Authorised Representative of Securitor Financial Group Ltd ABN 48 009 189 495 AFSL 240687

This is general information only and does not consider your personal circumstances. You should not act on any recommendation without obtaining professional advice specific to your circumstances. We recommend you speak to a financial adviser before acting on any of the information you read on this website.