How recent super legislation highlights the importance of ongoing review
Change is Constant
A Financial Plan is a snapshot of a moment. Your current financial situation, your personal circumstances and financial goals. All of which change with time. This may be due to change in your situation or environmental changes that affect you.
So it is fair to say when change happens you may need to move the goals a bit, or change them completely. This is why periodical review is so important. You wouldn’t stop going to the doctor just because of one clean bill of health. Things pop up which need to be addressed.
Your Super, Your Future
One such example of change was the new superannuation legislation that was introduced in this year’s budget – Your Super, Your Future.
One of the measures is aimed at reducing cases of multiple superannuation accounts individuals have. In turn reducing the fees they pay. To reduce this, from 1 November 2021, employers will need to check with the ATO if a new employee has an existing super account (a stapled account). The employer must pay SGC into that account.
On the surface, this is a good measure to address the problem. An individual has one account which they take through their whole working life. This will reduce the administration fees of multiple accounts and generally simplify people’s super.
Inaction has Consequences
An article in the Sydney Morning Herald by Charlotte Grieve reminds us of the importance of constantly reviewing your superannuation and insurance– especially when there are legislative changes.
The article sets out a real life example of Shane. He suffered an injury that left him Total and Permanently Disabled. He had insurance in his superannuation fund, but unfortunately his claim was rejected. The reason for this was that the insurance policy did not cover his line of work.
All insurance policies have terms and conditions, restrictions and definitions that need to be met in order to claim. Some higher risk industries (transport, police, mining etc) have set up industry superannuation funds. This allows them to offer members suitable insurances (amongst other things).
With the stapled superannuation account, when members move to a new employer they have unsuitable cover in their stapled superannuation account for their new profession.
Set aside time to Review
With any legislative change, there are obvious goals however often unforeseen consequences. No Financial Plan is set and forget, the financial landscape is constantly changing. Coupled with the life changes we all go through, periodical review of your financial plan is imperative to make sure you are meeting your goals.
If you would like to review your Financial Plan or discuss how a Financial Plan will benefit you, schedule a no Obligation Discovery Meeting with us at Discovery Wealth.
Authorised Representative of RI Advice Group Pty Ltd ABN 23 001 774 125 AFSL 238429. The information provided in this document, including any tax information, is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser.