read
Published: 06 Jun 2019
It has been on your to-do list for months and you’ve finally sat down to do it – it’s time to consolidate your superannuation.
If this is you, you will no doubt understand the potential benefits of consolidating multiple super accounts – lower fees, less paperwork and more money to enjoy in your retirement.
You may also know recent government changes to super mean the time to act is now.
But how equipped do you feel to choose the right fund to roll your savings into?
Getting started
The first step should always be to check what options you have in your current employment status.
Most people can opt in or out of any fund they like, but some workers may be limited by an industrial agreement that determines their fund.
Next, you’ll want to understand the different types of funds that are available in Australia, says Industry Super Australia chief executive Bernie Dean.
“It’s important to know the difference between an industry super fund, and a retail super fund, and whether profits are being returned to members (like you) or shareholders,” Mr Dean said.
Certain funds have a proven track record of performing better than others, with the average industry super fund performing better than the average retail fund over the long term.
Fees, benefits and insurance
How a fund performs, along with other key information, should be clearly stated in the fund’s product disclosure statement (PDS), so check the fund website or call them.
But remember that past performance is not a reliable indicator of future performance, so other important things to look for include administration fees, exit fees, insurance premiums and benefits, and each fund’s investment options.
Once you have all the information you need, remember it’s important to take all aspects of a fund into account when comparing.
There’s no point going for a fund with low fees if they don’t perform well, or you can’t access the life insurance you want.
Industry super funds‘ Compare the Pair tool can help you compare funds over the short, medium and long term to test whether your savings are on track or could be working harder.
It’s also important to ask yourself, am I comfortable with the investment risk of this fund?
For instance, funds range from conservative, low-risk options to high-risk, high ‘growth’ options. The level of risk you’re inclined towards may depend on your stage of life, or just how you view investment.
The time is now
Superannuation changes passed in Parliament in February mean there’s no time like the present to start consolidating.
The new legislation, to come into effect on October 31, will see inactive low-balance super accounts of less than $6000 transferred to the Australian Tax Office if they can’t be matched to an active account.
Once there, they will receive returns only at the Consumer Price Index (CPI), which is lower than all industry super funds.
An inactive account is one that hasn’t received a contribution or member-initiated activity for 16 months straight, and the member hasn’t requested the account stay open.
It’s important to remember that members with accounts that have not received a contribution or rollover in 16 months could lose the insurance associated with that account unless they choose to keep it.
So, the message is clear – get started consolidating now for peace of mind.
Simply call or visit the website of your preferred fund or log into your MyGov account, link your account to the ATO and click on the Super tab.
And finally, don’t forget to let your current employer know what fund you’ve settled on. You’ll be pleasantly surprised by how easy the whole process is.
This article was first published by The New Daily on 6 June 2019. Past performance is not a reliable indicator of future performance. 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.