So, you’ve put your current superannuation fund under the microscope, run the comparisons, crunched the numbers, and decided that it’s time to say goodbye.
(If you haven’t yet made the essential check on whether your fund is a winner or one of the super industry’s also-rans, read our quick and easy guide to comparing super funds.)
But before you cut ties and move your money – particularly if you’re attracted to a fund with a record of achieving high investment returns – there are a few other things to think about to make sure your new fund is going to deliver.
Sarah Saunders, head of consumer advocacy at Industry Super Australia, agrees that performance is important, but says there are other considerations that should be on your checklist.
“In addition to returns, you might also compare in-depth areas such as investment options, insurance coverage and a range of fees,” she says. “You could also choose a fund based on your profession or trade”.
A number of industry funds were founded to help employees in specific industries build their retirement savings, and while most funds are open to everyone these days, it’s worth checking if there’s an industry fund aligned to your area of work.
You can see a full list of Industry SuperFunds here.
Saunders notes that industry super funds are run to benefit members, not shareholders, and don’t pay commissions to salespeople, which are just two of the factors that have led Industry SuperFunds to on average outperform bank-owned retail funds over the past 15 years.
“[Industry funds] have never paid commissions or incentives to staff or advisers, and they invest in long term, nation-building projects” she explains.
Another important thing to check is that you won’t lose out on valuable benefits by changing funds.
For example, the Australian Securities and Investments Commission’s (ASIC) helpful MoneySmart consumer site notes that you should get professional advice before leaving an old-style defined benefit fund, because the terms typically offered by such funds are very generous and thus possibly not matched by your new fund.
It’s also a good idea to check whether changing funds will affect how much your employer contributes, and whether you’ll lose specific insurance benefits you value.
The government announced in the Budget 2018 that it would ban super funds from charging exit fees when a member chooses to leave, but this ban is not due to come into effect until July 1, 2019.
Once you’ve made the decision to switch to a winning fund, however, there’s some good news. Getting the switching process underway takes just a few minutes when done online. It’s as simple as going to your chosen fund’s website and filling in an online form to open an account.
If you prefer to do things on paper, give the fund a call to ask for the product disclosure statement for your chosen fund and complete the enclosed form.
While making that first step, it’s worthwhile making sure all your retirement savings are consolidated in a single account at the same time. Many industry super funds are already matching members’ multiple super accounts to help them consolidate their savings, but you can do so yourself by creating a myGov account to use the Australian Taxation Office’s online super search tools.
Or you can search with AUSFund, which was created to look after the unclaimed and inactive super accounts from more than 35 other funds from both the industry and retail super sectors.
The next step? It’s time to get your boss on board (most employees can choose their own fund these days, although some employment arrangements still specify the fund which must receive employer contributions).
“Tell your employer you’ve changed funds and ask for a ‘standard choice’ form so they know where to now pay your super,” Industry Super Australia’s Saunders explains. “Alternatively, fill out the ‘choice of superannuation fund’ form online, and give it to your employer”.
You can then bring all your super under one roof, including any old accounts that you’ve uncovered – which means you’ll no longer be paying multiple fees and insurance premiums.
“To move super out of your old fund, fill in a ‘rollover’ form on your new super fund’s website and they’ll do the rest,” Saunders says.
She says the process of helping secure your financial future by choosing a better-performing fund should be straightforward.
“If you have questions at all, just ask your new fund,” she says.
Have you been through the super switching process? Did you find it simple?
This article was first published by Starts at 60 on 12 February 2019. The information referred to may change from the date of publication and care should be taken when relying on such information.
*The above material, whilst correct at the time of publication may include references or statements which are no longer current.