June 24, 2025

Misconceptions of Superannuation: What Most Australians Get Wrong

Personal Wealth

Article Summary:

There are widespread myths around superannuation that can lead to poor decision-making and missed opportunities. In this article, we debunk the most common misconceptions—from believing your super’s performance is purely fund-related, to misunderstandings about how super is treated in your estate. Learn how superannuation actually works, how to gain control over it, and what you need to plan for in advance.

This article provides general information only and does not consider your objectives, financial situation or needs. You should consider whether the information is appropriate to your circumstances and seek personal advice from a licensed financial adviser.

Is Poor Superannuation Performance Always the Fund’s Fault?

“My super isn’t performing well—I need to change Super funds.” Sound familiar?
This is a common reaction, but often it stems from misunderstanding what superannuation really is. Your super fund is a structure, not the actual investment itself. The performance of your super is largely driven by the investment options you choose within that structure, not the super fund alone. While some fund-level differences exist, the investment options you select often have the biggest impact on your super’s performance over time.

Here’s What You Can Do Instead:

Understand what the right return is for you, not just the highest. Quite often as people enter into retirement they may not consider the level of risk they need to take on to achieve their goals.
Review your current investment allocation (growth, balanced, conservative etc.)
Seek financial advice to ensure you’re not overexposed or under-diversified.

👉 According to MoneySmart.gov.au, switching funds without understanding the investment mix may result in lower returns and exit fees.

Isn’t Super Just a Locked-Up Account Until Retirement?

Is superannuation just an account you forget about until age 60?
Not quite. Super is an incredibly tax-effective investment vehicle, which is why the government has limits and rules around how and when you can access it.

Here’s what you might not know:

You can choose where your super is invested—shares, property, fixed interest, etc.

There are ways to access your Superannuation before you fully retire. This can be done in a tax effective way as you transition into retirement. You can speak with a Cosca Adviser on how to do this and whether its appropriate for your circumstances.

Salary sacrificing and personal contributions receive favourable tax treatment. Be sure to stay within the current concessional cap (in 2025, typically $27,500) to avoid excess contribution penalties. Visit the ATO website or speak with a Cosca adviser for the latest limits.

It’s one of the few ways Australians can build wealth tax-effectively

The average tax rate on concessional super contributions is 15%, which is lower than most people’s marginal tax rate.

Will My Super Automatically Go Into My Will When I Die?

A huge misconception: “My super will be handled in my Will.”
In reality, superannuation doesn’t automatically form part of your estate. It is governed by what’s called a Binding Death Benefit Nomination (BDBN).

What You Need to Know:

If you nominate a dependant (spouse, child, interdependent), your super can be paid directly to them tax-free

If no nomination is made, or a non-dependant is nominated, the payout may be delayed and potentially taxed at up to 32%

A valid BDBN ensures your wishes are followed by the trustee of the Superannuation Fund.

Adult children who are not financially dependent may face up to 15%–32% tax on super death benefits, whereas a spouse or financially dependent child typically receives the benefit tax-free.

BDBN’s are a simple document with vast complexity attached to them. Careful consideration and a clear understanding of the implications of such a document are crucial. You should always seek Financial and Legal advice prior to submitting the BDBN. Cosca can help co-ordinate all of this as part of their Personal Wealth experience.

💡 According to ASIC, many Australians leave this crucial form incomplete or expired—leading to estate disputes and avoidable tax consequences.

Common Superannuation Misconceptions – Debunked

Misconception	The Reality
*“My super is underperforming, so the fund is bad.”*	Investment options drive performance—not just the fund
*“Super is just like a savings account.”*	It’s a tax-advantaged investment structure
*“My super will go to my Will.”*	Not unless you plan for it through a BDBN. Careful consideration of this is important as their are tax and estate implications attached to this simple document.
*“Only the wealthy need to worry about super.”*	Everyone can benefit from super’s tax efficiency
*“You can’t access or manage your super until retirement.”*	You can choose investments, make contributions and plan withdrawals

Want to learn more about Retirement? Read our essential steps to plan for early retirement here.

Can I change my super investment strategy?

Yes. Most super funds offer a range of investment options—such as high growth, balanced, or conservative. You can switch at any time through your fund’s portal or with guidance from an adviser.

Who will receive my super when I die?

Typically, your nominated beneficiary will receive it, ideally through a Binding Death Benefit Nomination. This ensures faster processing and potentially tax-free treatment for dependants.

Should I consolidate multiple super accounts?

Consolidating super reduces duplicate fees, simplifies management, and minimises the risk of lost super. Be sure to review associated insurance policies before doing so. Seek advice prior to doing so. To search if you have multiple super accounts, you can search for them here.

Is salary sacrificing into super worthwhile?

Absolutely. It allows you to contribute pre-tax income to your super, reducing your taxable income and growing your retirement savings more effectively. Cashflow becomes an important consideration when salary sacrificing, so you should seek advice to ensure your lifestyle isn’t compromised.

How often should I review my super?

You should review your super at least annually, or when you experience significant life or financial changes, to ensure your investment strategy still aligns with your goals.

What’s the difference between a super fund and an investment?

The super fund is the structure that holds your investments. The actual investments (shares, property, bonds) within that fund determine how your balance grows.

Can I leave my super to someone who isn’t a family member?

Only if they qualify as a financial dependant or interdependent. If not, they may receive the benefit as part of your estate and it could be taxed heavily.

Do I need a financial adviser to manage my super?

While not essential, an adviser can help you avoid common traps, make tax-effective contributions, and ensure your investment strategy suits your retirement plans.

How Cosca Can Help You Make the Most of Your Super

At Cosca, we work with individuals nearing retirement to ensure their superannuation is optimised—not just sitting idle. Our Personal Wealth team provides advice on: