Are you worried about your superannuation savings? You’re not alone. The recent collapse of the First Guardian fund has left many Australians wondering if their retirement savings are safe.
What Happened to First Guardian?
The First Guardian Master Trust, a managed investment scheme, has lost up to $446 million of people’s superannuation savings.
This scheme was used by around 6,000 investors through superannuation platforms like Diversa, Netwealth, and Equity Trustees.
The Australian Securities and Investments Commission (ASIC) alleges that investments were made using high-pressure sales tactics, which is a major red flag.
How Are Super Savings Protected in Australia?
In Australia, super funds are regulated by the Australian Prudential Regulation Authority (APRA), which ensures their stability and transparency. However, managed investment schemes like First Guardian are not regulated by APRA, leaving investors with limited protection.
Is Compensation Available?
There is a compensation scheme that provides some protection for people who suffer financial loss, but it’s capped at $150,000. This could leave a significant gap in retirement plans, especially considering the average retiree has around $250,000 in super savings.
Assessing Investment Options and Super Performance
When investing your super, it’s essential to understand the different types of investments available. MySuper investments, for example, are designed to meet the needs of most members and are performance-tested annually by the regulator. If a MySuper investment fails the performance test, you’ll be notified, and you should consider switching.
Red Flags to Watch Out For
ASIC deputy chair Sarah Court warns that there are several red flags to watch out for when it comes to sales calls about switching super. These include:
- High-pressure sales tactics
- Cold calls
- Free superannuation “health checks” and prizes
- Offers to find and consolidate “lost super” for free
- Unlicensed people involved in the advice process
- Poor or no product disclosure
- Promises of high or unrealistic returns
How to Check Your Super Balance
You can check your super balance, combine accounts, and search for lost super by logging into your myGov account and clicking on the Australian Taxation Office (ATO) under linked services.
Are Collapses Like This Common?
Unfortunately, collapses like First Guardian are not rare. Over the last year, there have been two other significant collapses, resulting in potential losses of over $1.2 billion from over 12,000 Australians.
Protecting Your Super
To protect your super, it’s crucial to be vigilant and do your research. If an investment seems too good to be true, it probably is. Always ask questions, and don’t be afraid to say no to high-pressure sales tactics. Remember, your superannuation savings are your retirement nest egg, and it’s essential to protect them.