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Loading ...My son is now at Uni and I am worried about fees eroding his super savings
July 24, 2008 by Josie Kay
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Q. My son worked at Macdonalds for 4 years and has a superannuation with employer contributions. He is now doing full time study at uni. Should he do something with this superannuation before it is eaten away with fees?
A: I just love it when people are conscious of fees within their superannuation fund. As you know there are far too many people who simply don’t care and then years later wonder what happened.
Just wish they understood that if you are in the wrong super fund, fees can easily strip 20% of your final retirement benefit (just imagine a slow drip from a tap - very soon the bucket is full and in this case the bucket belongs to the financial institution and in some cases, the financial planner).
The Government is attempting to protect those with small account balances and introduced member protection rules that apply to funds with 5 or more 
members. Basically, if the withdrawal benefit is less than $1,000, the super fund cannot charge fees more than any investment earnings in a year.
This rule applies to benefits which arise from the super guarantee. You will need to check your son’s super fund to see whether this is in place.
Also, many people forget that death and permanent disablement insurance is usually attached to their superannuation fund. This is not a free benefit and premiums will be deducted monthly. If your son is single, he may not need this benefit.
For your information, if it is paid to you, the parents, you are not classified as non-dependants, and it will be taxed 31.5%. The accumulated amount in the account balance is taxed at 16.5%. (tax free if paid to dependants e.g. spouse, child under 18).
Just a thought, but remember if it is cancelled, it will not be reinstated without providing medical evidence, i.e. within his current fund. If he starts a new job, they usually offer it again, without providing medical evidence.
For your information, member protection rules do not apply to insurance benefits.
You will need to do some research in relation to fees. From my experience, most super fund charge on average $60-$100 per year admin fee. As a general rule, they also have an investment management fee, however, this is automatically deducted from investment returns.
You also need to check whether an adviser is receiving commissions. As you know this is a free service.
Consequently, I am not able to recommend a specific product unless I first obtain lots of personal and financial information, and then put everything in writing to you (in other words you will receive a document about an inch thick!).
With a little bit of homework, you will be able to work out whether your son is getting a good deal. The following websites might help:-
·Superannuation fund comparison worksheet
If you get confused when doing your research, don’t hesitate to contact me again via www.askjosiekay.com. Wishing you and your family Happy Money Organisation. Josie Kay
Photo credit: star5112
YOU MUST READ THIS: Don’t forget that the above information is general in nature and not specific to your goals and objectives. It is recommended that you seek personal financial advice specific to your needs. Thanks for posting your question on www.askjosiekay.com. As you know, this is a free service and if you found it useful, I would be chuffed if you told your friends, family, workmates, local media outlets to check out and subscribe to www.askjosiekay.com - free financial advice by a Certified Financial Planner. No strings attached!
ps. Hope the above helps. I am continually trying to improve this service, your feedback would be greatly appreciated.
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good job on you as financial plannerdifferent country has different culturemay be someday i’ll ask some my financial planning problemthat i’m so bad in it