Australia's workforce is much more mobile than it used to be. Linking this mobility to our compulsory superannuation system, it becomes possible - even likely - to end up with multiple smaller super fund accounts.
Multiple accounts can mean:
- Higher fees by incurring multiple fees from multiple low balance accounts
- Multiple information and paperwork to keep track of
- Multiple investment decisions
- Potential to lose track of various account balances; and
- Less effective financial planning outcomes.
In the final analysis, superannuation is complex enough without making it worse with multiple super funds!
Changing jobs is an opportunity to reconsider your super options
Many of us are able to choose our own super fund, and employers are generally obliged to forward super contributions to that fund. Where someone does not choose a fund, the contributions will generally go to a default fund, which can result in multiple small super funds being created.
By exercising the right to choose a super fund, it is possible to choose one that may:
- Offer a wide range of investments options to match changing lifestyle needs
- Offer a range of insurance options
- Have a more competitive fee structure
- Allow consolidation of multiple smaller account balances; and
- Allow the member to direct each new employer's super contributions to the same fund as they move through the workplace.
Changing jobs provides a perfect opportunity to consider where to rollover any current super benefit. Take some time when selecting a super fund that meets the above criteria so that it can be used now and into the future.
Having done that, go through any records and check for any other small balances with other funds and then consider rolling them over to the new fund. The Australian Taxation Office (ATO) "Superseeker" website is a good source of information and it is possible to search for any lost or forgotten super balance with a view to consolidating these too.
Do I need a financial planner to help me?
There are many funds available each with different features and costs so it might be advisable to seek the assistance of a suitably qualified financial planner when undertaking this process. While generally it is advantageous to consolidate smaller multiple accounts, it is possible that an insurance policy is linked to one of them. If so, careful consideration is needed prior to closing and rolling over the super benefit in case the existing linked insurance policy cannot be replaced.
There are a number of online resources that can be consulted when comparing super funds. They provide a comparison between costs and features of retail and industry super funds and include:
How to get started
Getting started is easy. When about to change jobs:
- Check with the new employer that you can exercise your right to choose a super fund;
- Go through personal financial records to identify any other funds;
- Visit the ATO Superseeker website and search for lost and forgotten super;
- Super can be complex - consider using a financial planner.
- Check the online comparison websites; and finally
- Make sure to read the product disclosure statement (PDS) of any super fund you may be considering.
The most important step is to start! If a change of jobs is imminent, it may be a good time to review existing superannuation arrangements and possibly avoid ending up with yet another small super account. Use this as an opportunity to set your super – and your financial future - on a stronger path.