Anatomy of a super fund
QSuper is one of the best superannuation funds around. It charges low fees and its investment returns have been impressive. In the past QSuper was compulsory for Queensland Government employees and not available to others. The big news is that from July 1st 2017 this will change. The restricted, golden cage only accessible to a few is now available to everybody and those who are inside but yearning to be outside can now leave. This makes it worth looking at QSuper’s strengths and weaknesses – can QSuper be recommended as a super fund?
The answer is ‘sometimes yes and sometimes definitely no’. There are two reasons for a potential negative view: The first one is that QSuper has recently changed its investment philosophy. It is as if their investment committee sat down and checked when members left QSuper in the past (once you stop being a QLD government employee you could stay with QSuper or leave) and what triggered their departure. If lots of people left after QSuper lost money in a year – as happens from time to time – then their new investment policy makes sense. Its new investment options are absurdly tilted towards investments that rarely or never go down in value but, in return, also rarely or never go up more than a little in value. In other words, your money is safe – very safe – with QSuper but if you want your money to last for your entire retirement then their approach is incredibly cautious, perhaps even far too cautious. The other reason is QSuper’s income protection policy. The policy is very cheap and there are some big advantages and also some big disadvantages. The default period QSuper pay is up to 2 years but you can choose an option to extend that cover to the insurance policy paying until you are 65. However, they have a clause that states that you do not get paid if they classify you as permanently disabled and that is quite unexpected. There are many other policies around that would fully pay you in those circumstances but they cost more. The most important thing when deciding which policy or super fund to go with is to fully understand what you are getting and what you are not getting that you might rightly expect to get! I myself still get amazed (not in a good way) at some of the exclusions, conditions and choices I come across.