We’ve gone through some of the fundamentals of super, including what is superannuation, contribution types, account types, and how to invest your super. In this article, we’ll tell you why and how to consolidate your super accounts.
Quick Links
Why consolidate your super
How to consolidate your super accounts
Insurance in super
Other things to do before transferring your super
Why consolidate your super
If you’ve had a few different employers in the past, you may have multiple super accounts. Almost all super funds have a fixed administration fee, and as a result, if you have multiple accounts, you are doubling or tripling up on a fee that you really should only be paying one of. Not only that, if you didn’t pay attention to the super fund you were allocated to, that fund may have much higher administration fees than a low-cost industry fund [1].
Additionally, if you have multiple super accounts, you may have multiple insurance policies in your super accounts covering the same thing, and some insurance policies will not payout for a claim if you get paid out for the same thing by another policy, resulting in wasted costs each year.
And apart from fees, when you consolidate your super, it will also be easier to track your super and easier to create a coherent superannuation investment strategy.
[1] Public super funds can be either retail super funds or industry super funds. Retail super funds are typically run by private companies for-profit, whereas industry funds are run only to profit their members (you). The result is that the fees are often lower in industry funds than in retail super funds as their interest is more aligned with yours.
How to consolidate your super accounts
The first thing to do is find your lost super, which you can do on this webpage:
https://moneysmart.gov.au/how-super-works/find-lost-supe
Next, you will want to choose a super fund to consolidate your super accounts into, there are three ways you can consolidate your super.
- Initiate it through your new superfund and let them do it all, so you don’t need to deal with your other super funds at all. This is usually is all done online without needing to speak to them directly.
- Through MyGov:
- Create a MyGov account if you don’t have one
- Log in and link the ATO to your account if it isn’t already linked
- Go to the ATO section
- Go to the ‘Super’ tab, which will show all you super accounts as well as any super the ATO is holding for you
- Select the fund you want to transfer from and the fund you want to transfer to and hit confirm.
- Get the ATO rollover form, fill it out, and send to the fund you are sending from. You can only transfer the entire amount this way, whereas with the above methods, you can transfer part of the balance.
The whole process is very easy. But there are a few things to be aware of before the consolidation.
Insurance in super
Before closing a super account or transferring to another super fund, check if you can transfer your current insurance policies to the new super fund. Don’t close your existing super account and cancel your existing insurance policy until you have either transferred your existing policy (this may be possible, so check) or have a new one in place. If you cannot transfer and get a policy of the same coverage (due to being older or having pre-existing conditions that came about after you began your previous insurance policy), it might be worth staying with your current super fund, or if the investment options don’t meet your needs, keeping your former super account open for the sake of insurance coverage.
If you do keep your existing super fund open just for the insurance, check the rules of your existing fund about the requirements of keeping your insurance. You may need to have your account remain in an ‘active’ status to avoid having them automatically discontinue your life insurance. Under the legislation, being active means having a balance above $6,000 and receiving a contribution within the last 16 months, but it’s best to double check with your fund.
Also, because blue-collar workers are at higher risk, insurance premiums through super are often higher for them, and it is not unusual for premiums to be double that of white-collar workers. Blue-collar worker is also the default setting. Check that your insurance through super has your correct profession to avoid overpaying unnecessarily if you are not in that group and to avoid having a claim denied if you are in that group and did not correctly select it.
We will go through insurance in more detail in a future set of articles, but due to the complex nature of insurance and how critical it is for most people, professional advice is recommended when it comes to life insurance.
Other things to do and be aware of before transferring your super
- Make sure all details match exactly – name, address, DOB, TFN. If any don’t match, the transfer may not go through.
- Before closing a super account, make sure you have given your employer the details they need to pay into your new account – and wait for at least one payment to have come through before closing your old super account.
- If you’ve made a post-tax contribution to the fund you are moving from and wish to claim a tax deduction, you need to make the claim (lodging a Notice Of Intent form and receive the acknowledgement from the super fund) prior to moving the funds as once the funds are moved, they cannot be claimed.
- If you are in a defined benefit super fund (usually corporate or public sector funds) or an untaxed super fund (e.g., GESB or other public sector funds), you need to make sure you understand the benefits you may be losing by leaving before doing so. It may be worth seeking advice before leaving.
- If your current super fund has something called a “retirement booster”, “balance booster”, or “retirement bonus”, you should check how much you are foregoing by moving.
- While you are transferring your super, your balance will be in cash for a short period of time. If the market is falling at this time, it will be beneficial, but if the market is rising and you miss out, this will be detrimental. One way to reduce this impact for large balances is to move it in piecemeal, such as 25% at a time.
- When you are ready to open the new account, consider temporarily leaving a small amount in your former super fund to pay for existing insurance premiums until insurance in the new super fund has been set up and to keep your former super fund open until the above steps have been completed.
This webpage from Moneysmart has more information on how to transfer your super.
https://moneysmart.gov.au/how-super-works/consolidating-super-funds