Eric Black, of Media Super, during his session at the Launceston Freelance Festival – “The Future of Superannuation”

Article Written by Melissa Iaria

When I checked my superannuation recently, I got a rude shock.

I'd been paying for insurance I didn't know I had, or need, for years. I shuddered at the thousands I had shelled out in annual premiums, unwittingly diminishing my nest egg.

Worryingly, I'm not alone. In 2018, a Productivity Commission inquiry found about a quarter of super members did not know if there was insurance included in their fund, while 16 per cent knew they had insurance, but did not know what it was for. Some members even paid for insurance policies that were unnecessary.

Super is compulsory for most working Australians to help save for retirement. Employers are required to make regular contributions to your account, totalling 9.5 per cent of your wage.

For freelancers and sole traders, super is generally not compulsory and they must take care of it themselves. Alarmingly, though, up to a fifth of the self-employed have no super at all, Media Super business development manager, Eric Black, says.

He has seen some freelancers delay making contributions for years, while others can view personal contributions as a reduction in their take-home pay when in reality putting in that extra bit each week can add thousands to your final balance.

It comes down to asking yourself what kind of retirement you envisage, Mr Black told the Launceston Freelance Festival recently.

“Seriously, you have to ask yourself where you want to be in retirement: drinking bottled wine or the goon bag.”

So what is a comfortable retirement? It depends on how you live.

Australia's superannuation industry peak body, ASFA, estimates singles need $44,000 a year, and couples, $62,000, to retire comfortably.

To whip your fund into shape, firstly consider if it's right for you.

Look at how it is performing, how the fees compare to other funds and if insurance is provided, does it suit your current circumstances?

Most super funds will automatically provide you with insurance for life, total and permanent disability and income protection and it's up to you to opt-out, by cancelling or changing your level of cover. You could be paying for insurance you don't want or need.

Ensure you've consolidated your super. About a third of Australians have more than one account and that means multiple sets of fees and insurance premiums. It's easy to find any lost super via the my.gov.au website or your super fund. There are no longer exit fees.

Make regular contributions and top-ups a habit. If you can't contribute the full 9.5 per cent, “something's definitely better than nothing”, Mr Black advises. If you're a low-income earner making under $40,000, you may be eligible for super tax incentives.

Finally, know your rights. Having an ABN does not render you ineligible for super payments if you take on short term work. Check with the ATO on where you stand.

The good news, though, is it's never too late to start contributing.

“The sooner you do, the better off you'll be,” Mr Black says.

This article was commissioned and produced on the Fabulate platform. To learn more about how to get quality content created on demand for your business click here.

‍