Ask the Experts – Sangeeta Venkatesan – Executive Chairman, Fairvine Super

By Courtney Mathew

15 Apr 2020

With over 25 years’ experience in the banking sector, Sangeeta Venkatesan has a wealth of knowledge across a range of areas and disciplines in the finance sectorAcross her varied roles in the banking, finance and stockbroking sectors, she’s encountered many clients who have gone through significant life changes such as divorce or the loss of a partner which have had drastic financial repercussions. This highlighted the issues many women face in relation to their money and superannuation, and the financial literacy gap that many women face. 

Sangeeta notes that Superannuation can be confusing for many Australians: it is an opaque sector with little engagement with members and a lack of education and innovation Around 30% of Australians don’t know their super balance or how their money is invested, and three quarters of Australians don’t open their mail from their superfund. 

Sangeeta shared some stark facts about women and super with us 

There are a few factors that contribute to this: the non-linear career of many women, pausing their career for family reasons, not satisfying the minimum working requirements to pay super, employers not paying super monthly which cumulatively  result in lower super balances for women. 

With this in mind, the aim of Fairvine Super was to create a superannuation option that addresses these challenges and helps educate and empower its membersSome of the technical innovations introduced by FairVine include: 

Superannuation and COVID-19

The Australian Government has recently announced superannuation concessions that enable eligible individuals to access some of their retirement savings now. The question is whether or not that’s a good idea in the current environment. 

Super is intrinsically linked to equity market performance and with the dramatic drop to the market most super balances would be impacted negatively  meaning what you will get if you withdraw today would be less than if you withdrew last year when the market was stronger. While the market, and your super balance will likely recover over time, there is no certain time frame for this.  

In response to this, FairVine have created a FairGo policy where members who lose their job because of the COVID-19 crisis will be rebated half of their fees until they start earning superannuation again (up until the end of 2020). And, if you become a new member of FairVine, you can enjoy the same fee reduction – even if you’ve already lost your job because of the COVID-19 crisis.  

Early withdrawal 

Recently the Government announced changes to super withdrawal to help those in dire financial situations due to the health crisis. There have been over 600,000 applications so far. 

What is available?   

$10,000 available in the financial year 2019-20, i.e. by June end. Then another $10,000 in the financial year 2020-21. 

To be eligible for early release, you must satisfy one or more of the following: 

When can you apply? 

The government has advised that you’ll be able to apply for an early release of your super from 20 April 2020. Remember, you apply via the ATO – you can’t apply through your super. 

So… should you withdraw early? 

It comes down to a number of factors which will depend on your financial circumstances, so speak to your financial advisor for specific advice.  

If you withdraw $20,000 now, assuming the equity market stabilizes, it could have an amplified impact of over half a million dollars in 35 years.  Thus if you are in the beginning or mid-career it would benefit you most in the long run to keep your super balance in your fund. 

Sangeeta recommends asking yourself these questions to inform your decision; 

  1. Where is your super? What fees are you being charged? 
  2. When do you plan to retire? 
  3. Is your super fund liquid? 
  4. What is your asset allocation strategy? Does your fund invest ethically? 

Whether you withdraw or not, Sangeeta recommends taking this crisis as an opportunity to sort out your superannuation, consolidate your super funds to reduce the amount of fees you pay and to find out how your money is invested and how this aligns with your values. 

Disclaimer 

Any advice provided is general in nature and does not take into consideration any personal objectives, financial situation or needs. WiBF is not a financial adviser. You should consider seeking independent legal, financial, taxation or other advice to check how this information relates to your unique circumstances. 

References 

Wealth Sentiment Survey – MLC (June 2016) 
The Australian, Multiple Superannuation Accounts cost 26bn a year (Oct, 2019) 
Engaged Strategy, Australians put faith in SMSFs rather than super funds (Dec, 2014) 
Australian Bureau of Statistics, 6523.0 – Household Income and Wealth, Australia, 2013-14
The Facts about women and super – Womeninsuper.com.au/contents/the-facts-about-women-and-super/gjumzs. 
Prodolin, R – “Women over 55 now the fastest gorwing homeless people in Australia” – AFR (2018). 
“A husband is not a retirement plan”  – Commonwealth of Australia Report (2016).
ABC News, More than 600,000 Australians apply for early release of superannuation under coronavirus assistance scheme (Apr, 2020)