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Consolidating your super

by Alexandra Middleton | 26 Jun 2013

As you approach retirement the performance of your superannuation should be at the forefront of your mind. For many Australians, their super will be the primary income stream when they retire, so it’s important to make every dollar count. 

A sure-fire way to deplete these savings is to have your superannuation spread across multiple funds, being unnecessarily whittled away by fees.

Consolidating your super savings into a single fund is simple and the benefits substantial. Not only will you retain extra savings, you will reduce the amount of paperwork you have to monitor, making it easier to identify investment opportunities and keep track of your super’s progress. By having your funds spread thin you also sacrifice the higher returns that could be earnt on a larger consolidated sum. 

Each year the superannuation industry receives $20 billion in fees, with many Australians contributing numerous times to this balance. “Australians spend more money each week on superannuation fees than they do on electricity, yet only a small portion of those with superannuation pay close, if any, attention to the decisions made on their behalf by their superannuation ‘trustees’,” says Richard Denniss, author of a recent Australian Institute report.

It’s easy to allow your super accounts to accumulate, taking on a new fund each time you change jobs. However, it’s even easier to take positive action for your future and roll them into one.

What to consider when consolidating

Once you’ve made the decision to consolidate, you need to consider which of your current funds best suits your needs.

By referring to a past statement, calculate the annual costs associated with each fund, including administration, investment management, membership and contribution fees. Be sure to look out for any termination fees that may be charged by your fund, as these will heavily influence your decision. Superannuation fees vary considerably from fund to fund, and can translate to markedly different balances at the time of retirement.

“Many Australians pay fees of over two per cent per annum to have their compulsory superannuation ‘managed’ on their behalf when it is possible to have funds managed for around 0.5 per cent per annum,” says Denniss. “This means a person with a fund balance of $200,000 could reduce their fees from around $4,000 per year to around $1,000 per year simply by filling out a form.”

Equally important is the impact withdrawing your balance will have on your insurance benefits and whether you will be fully insured under a different fund. When weighing up your options pay close attention to what a fund offers in the way of life and permanent disability insurance. If you are still working, check that your employer can contribute to the fund you plan to roll into.

How to consolidate your funds

Over the years you may have lost track of your super accounts. If no contact has been made and no funds contributed to an account for more than two years, super funds are required by law to transfer this ‘lost’ super to the Australian Taxation Office (ATO).

This is not cause for concern, funds can easily be found and retrieved using SuperSeeker, a free online tool offered by the ATO.

If you own one of the more than 3.4 million lost super accounts held by the ATO, SuperSeeker can also be used to consolidate your funds online.  

Alternatively, you can download the ‘Request to transfer whole balance of superannuation benefits between funds’ or “Portability’ form, which is found on the ATO website.

Once your old fund receives the request to transfer they have 30 days to move your money to your allocated fund.

Another avenue is to seek help from your current fund. Many funds now offer a consolidation service, where you fill out their rollover form and they organise the rest.