This is not uncommon, as around 4 million Australians also have more than one. There are pros and cons to having multiple super accounts so it’s a good idea to understand your options.
You are allowed to maintain more than one super account, and this can have its benefits. These include keeping multiple insurance covers, increasing the variety of investment options or if your super is in a defined benefit fund, retaining your defined benefit entitlement. However there are some disadvantages, like keeping track of more balances, fees, investments, and retaining unwanted insurance cover plus you’re at risk of ending up with lost super accounts.
Why people have multiple super accounts
Not consolidating super accounts
Not knowing you can consolidate your super could be a reason why you have more than one. But don’t stress, it’s easy to combine super. You can often do it through your online super account with your preferred fund or through your myGov account. Simply link it to the Australian Tax Office (ATO) and see what super accounts are connected to your tax file number. It’s important that if you are unsure about anything that you get financial advice before consolidating your super accounts as there may be fees and taxes that arise, the loss of opportunity to transition insurance cover, and other things.
Changing jobs frequently
If you have changed jobs a few times, there’s a chance that you might have multiple superannuation accounts. This is because employers have a default super fund that they contribute to and if you didn’t give your employer your super fund’s details when you started, prior to November 2021, they might have created an account for you.
You can also actively choose to have more than one super account, and some find doing so easier to manage. You might do this if you want to increase the variety of investment options or take advantage of the insurance cover in a certain fund. Insurance from multiple funds can be paid out, however insurance policies may state that benefits like income protection may be reduced or not payable if you have received payments from another income protection cover. It’s important to read the relevant product disclosure statement to find out more about insurance cover.
Drawbacks of having multiple super accounts
Increased fees and charges
Most super funds have a variety of superannuation fees and costs. If you have more than one super account, you’re most likely paying these multiple times! Super funds will also often provide you with automatic default insurance cover like life insurance (also called death cover), total and permanent disability insurance (TPD) and income protection insurance if you meet certain eligibility criteria so you’re probably paying multiple premiums for cover that you may not actually need or be eligible to claim.
Complications in paperwork and admin
Another reason to combine your super into one account is to make it easier to manage updating your personal details. Keeping things like your address, email or a name change and your nominated beneficiary up to date makes it less likely for you to lose super. There’s also going to be less paperwork in terms of annual statements and fund reports.
Potential for lower retirement savings
Having your super spread out across multiple accounts can make it harder to track your money’s growth or make good investment choices on top of paying multiple superannuation fees and insurance premiums. This can leave you at risk of low retirement savings. Get an estimate of your retirement savings with our retirement savings calculator.
Case study for consolidating multiple accounts
Let’s look at how consolidating multiple super accounts can help you save for the future.
Sarah is 27 years old and currently has 2 superannuation accounts. Account A has a balance of $41,652 and Account B has $7,752. Assuming she keeps both accounts open, but is only contributing to Account B, the combined balance of the two accounts when she retires at 67 is estimated to be $587,203. This is made up of $61,408 in Account A and $525,795 in Account B.
However, if she was to consolidate her superannuation into Account A, her estimated balance at retirement is $734,287.
This assumes that she earns $100,000 p.a before tax and super, makes no extra contributions and has no career break.
As you can see, consolidating your super accounts can be a good option to help you feel more financially secure in your retirement. This case study is purely illustrative and not a guarantee or promise that everyone who consolidates will have the same outcome.
The assumptions used for this case study are based on the following:
- a starting super balance of $41,652 with Account A and $7,752 with Account B;
- an initial annual salary of $100,000;
- assumes that Sarah will retire at 67;
- the retirement estimate for Account A is based on results using TelstraSuper’s calculator ‘Retirement Lifestyle Planner’. This calculator is available at Retirement Lifestyle Planner | TelstraSuper and the calculation was produced on 19 October 2023;
- the retirement estimate for Account B is based on results using EquipSuper’s ‘Retirement Calculator’. This calculator is available at Welcome - Equip Super calculator (supercalcs.com.au) and the calculation was produced on 19 October 2023;
- in the relevant calculators, selecting TelstraSuper’s “Balanced” investment option or EquipSuper’s “Assertive” investment option;
- assuming no partner; and
- assuming employer contributions equalling the superannuation guarantee percentage.
Consolidate your super
There are some good reasons to combining your multiple super accounts, because it can make keeping track of your super and all it involves easier.
Before you start consolidating your super into one account, make sure you to check whether it’s worth transitioning your insurance cover, keeping that account open because your employer only covers fees or premiums associated with that fund, or if there are any fee or tax implications. You can read more about this and how to consolidate your super here.
Things to look out for when comparing super funds
Investment options & performance
Super is a long-term investment. So, it’s a good idea to look at different fund’s investment options as well as their long-term performance and compare them before making a decision that is right for you.
Fees & costs
Superannuation fees help cover the cost of running the fund as they manage and invest your money. You ideally want a low-fee super fund that delivers high long-term investment returns.
It’s important to look at what insurance cover you currently have, and whether a different super fund will give you the level of cover that suits your needs.