Because we know you've told your mum you already have.
Along with cancelling your hasn't-been-used-in-six-months gym membership, looking into your superannuation is a life-admin task you know you should tick off but never seem to get around to.
Friends and family members have even told you how easy it is but for those who don't consider themselves financially-savvy, or simply like to procrastinate (guilty), the task can quickly fall into the too-hard basket. If it's really that easy, why not just consolidate tomorrow?
Hard truth: Unfortunately, maintaining separate super accounts will most likely be costing you a sweet fortune, with each charging its own set of annual fees. Without seeing each fee, charges to our super accounts can be easy to ignore. In fact, of the 14.8 million Australians with super, approximately 40 per cent have more than one account, and therefore, more than one set of fees.
If you've had more than one job, chances are you'll have more than one super account.
Put simply, to consolidate your super means to combine all your funds into a single account. This can save you from paying multiple fees that eat into your retirement savings (yes, your super = your hard-earned cash) and will mean that you only need to manage the one account going forward.
Plus, while seeking out your various super accounts, you can also search for any lost super. In Australia, there's currently $17.5 billion sitting unclaimed and some of it could belong to you!
How much are super fees costing me?
While all super accounts will vary in their fees, a study by Canstar in 2016 found the average cost in super fees for a super balance of $20,000 or less to be $275 per annum. Times this by your number of super accounts and you can quickly see how much of your money you're burning.
How to consolidate your super
1. Check the details of your super funds
Before you consolidate your super funds, start by looking into your current funds and asking of each:
- Are there any exit fees?
- Do you currently have insurance through this fund?
- Will changing out of this fund affect your current employer's payments?
2. Compare super funds
Use a super comparison website to see how each of your existing super accounts compare to one another, as well as others on the market.
Tip: Industry SuperFunds are run only to benefit members, have low fees and have never paid commissions to financial planners. Look out for the Industry SuperFund symbol.
3. Make an informed choice
When it comes to choosing a super fund, look for a fund with:
- Low fees
- Suitable investment options (i.e. how your fund will invest your money — make sure you're comfortable with the level of investment risk)
- A history of high fund performance
- Suitable insurance coverage (see what is available and how much it will cost you)
- Great service
Tip: When consolidating your super, you don't have to choose your current account or the account with the highest balance. The best fund for you may be one of your smaller accounts, or a completely new fund.
4. Open a new fund
If you have chosen a new super fund, you'll need to open a new account with the fund. Ask the fund for all the details your employer will need to pay your super into that fund, and make sure you can get your desired level of insurance before you switch funds.
5. Tell your employer
Contact your employer or your company's finance department to talk about your change in super accounts. It's important they know where to pay your super and how to correctly identify you to the fund.Your new fund should provide you with a form to give to your employer but if they don't and you're joining an Industry SuperFund, you can provide this completed form instead.
6. Rollover your super
Log onto the MyGov website or app—or create an account—then click the 'super' tab. Here you'll find the details of all your super accounts, including super that the ATO is holding on your behalf, and select which fund you would like to transfer your money to. Within three days, your funds should have moved into your chosen account.
Alternatively, your new super fund should give you the option to rollover any existing accounts you have.
Feeling lost? Same. Thankfully, most Industry SuperFunds offer online consolidation services (even as soon as opening an account with them). All you need to do is have your tax file number on hand.
Always be mindful of new legislation
It pays off (literally) to keep an eye out for changes in consolidation legislation. Small super accounts (less than $6,000) that have been inactive (received no contributions or rollovers and no investment directions, amongst other things) in the last 16 months will be automatically consolidated to the ATO as of October 31 this year. Although the ATO will attempt to match these small accounts with a person's active account (the account your super gets deposited into), it can result in the ATO keeping a hold of your money. Rude, we know.
Who will this affect the most?
If a woman is on parental leave for more than 16 months and has an inactive account of less than $6,000, that account will be rolled over to the ATO.
She may also have a larger super account that would otherwise be active if she was working, but since she is on parental leave it is considered 'inactive'. The less than $6,000 account therefore does not have an 'active' account to re-match to and will sit at the ATO as Government revenue unless she takes action herself.
Keep a track on your super and make sure you're up to date on the new changes to superannuation legislation before they are implemented on October 31. Remember: it's your savings, your money.
This article was first published by ELLE on 15 May 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.