Should you consolidate your super?
Find out why consolidating multiple super funds into one can save you time and money, and how to choose the super fund that suits your circumstances and needs.
Why would you have multiple super accounts?
Like many Australians, you might find yourself with multiple super accounts, usually because of changing jobs throughout your working life.
Generally, if you started a new job with a new employer before 1 November 2021 and you didn't ‘nominate' or choose a super fund, your employer would open an account with their preferred (default) super fund for you. This process meant that millions of Australians ended up with multiple accounts, leading to extra fees that ate into super balances. To try and address this issue the government has introduced something called ‘super stapling' from 1 November 2021.
What is super stapling?
Your super account will now be attached, or 'stapled', to you as you move from job to job. The idea is that you'll avoid having unnecessary accounts, and consequently additional fees.
How does it work?
When you start a new job, you can choose which super fund your super is paid too, that hasn't changed. The difference now is that if you don't choose a super fund your employer must check which super fund you're stapled to (your current fund), they'll do this through the Australian Taxation Office (ATO). They'll then pay your super into your stapled fund. The only time this wouldn't happen is if you didn't have an existing account (if this was your first job or you've just moved to Australia). In this case, who your super is paid to will be determined by either an EBA or modern award for your workplace or the employer's default fund.
It's important to know that despite this change, you can still change super funds at any time*. Different rules apply to Defined Benefit Division (DBD) members.
What does this mean for you?
You'll avoid paying additional fees! It may be a good time to find any old or lost accounts you might have and consider whether you'd like to keep them all or consolidate. This article will cover why and how you might combine your super.
Why combine your super?
Around 4 million Australians have more than one super account (as at 30 June 2020). Super is money that belongs to you. So it's a good idea to keep track of all accounts you might have and manage them to make the most of your future income in retirement. Below we'll cover why consolidating your accounts can save you time and money. We'll also look at circumstances when it might be better to leave your super where it is.
Some of the benefits of consolidating super
Save on fees
The Superannuation Productivity Commission's 2019 report, into the efficiency and competitiveness of super found that Australians spent more on super fees per year than we did on electricity!
Typical fees and costs include administration fees, investment fees, indirect costs, insurance premiums and more. If you have more than one account, you're paying these fees on each account each year! One of the advantages of choosing to combine your super is only paying one set of fees.
You also don't need to worry about being charged an exit fee. Exit fees were charged in the past but have since been banned.
Generally, when considering super funds, a good place to start is looking at their fees in relation to their investment performance. Ideally, a low-fee super fund that delivers high long-term investment returns may be more suitable but this will depend on your own personal circumstances.*
We have some of the lowest fees in the industry as well as a record of industry-leading performance* across various investment options. If you're interested in joining us or finding out who we are you can learn more about UniSuper here.
Save on insurance premiums
Generally, if you're eligible, super funds will provide you with default insurance cover – usually for life insurance (also called death cover), total and permanent disability insurance (TPD) and income protection insurance. If you have multiple funds you could be paying multiple insurance premiums which might not be beneficial to you.
Simpler to track
Apart from saving on fees, one of the other motivations of consolidating is you can keep track of your super. This is also an advantage to stapling. By having just one account it might be easier for you to update your personal details including address, email or a name change, as well as easily update who should get your super if anything were to happen to you. You can also stay on top of your investment options.
Managing your investment options
It's a good idea to keep on top of your investments in super. Each super fund will have multiple investment options you can choose to invest in. To understand how your option is performing you'll generally receive an annual statement, although you can also check your online account. This may be more challenging if you have multiple accounts.
Some reasons to maintain multiple funds
While there are benefits to combing super, there are some reasons why it may be better for some people to keep multiple super fund accounts.
To maintain insurance cover
Different super funds offer different types and levels of insurance cover. Generally, if you combine super accounts, you will lose any cover you have with the super fund you close. You should always check the super fund you're choosing can cover you for equivalent (or more) insurance cover. You need to be particularly careful with this if you have a pre-existing condition you're currently covered for (a new fund may not cover it), or if you're older, as the insurance may not cover new customers above a certain age. If you are unsure you should seek financial advice from a qualified financial adviser.
Your super is in a defined benefit fund
Depending on the specific rules of the DBD you're in, you may not be able to combine your super. You may also risk losing inbuilt benefits that typically come with the DBD. It's important to consider what you could lose before you make any decisions. Learn more about the UniSuper DBD.
You want the mix of benefits from multiple funds
You may have super funds offering different features and benefits that you wouldn't get from one fund only. For instance, you may like an investment option offered by one fund, but the insurance offering from another. If it works for you, and you're comfortable that the benefits outweigh the cost of additional fees, you may wish to keep multiple accounts.
Choosing a super fund
If you decide to consolidate your super, it's important to choose carefully which super fund you want to stay with. You might also want to sign up with a new super fund altogether and rollover your existing balances into that.
Now that ‘stapling' has been introduced you'll generally be attached to your main account by default. So, it's even more important to actively choose a fund that's best suited to your needs. By doing your homework you can make an informed choice so you aren't ‘stapled' to a fund that may not lead to the best retirement outcome for you.
When you're choosing a super fund you should consider the following:
Investment performance over time
Depending on your age, you'll be growing your super balance over a long period, potentially over 40 years! You'll want to choose a super fund, and an investment option, with a strong performance over the long term.* It's important to remember that past performance is not an indicator of future performance.
If you're comparing super fund performance, ensure you compare equivalent fund options. The government has introduced the YourSuper comparison tool to help you check the MySuper product for many funds, including UniSuper.
Benefits and services
Some super funds provide services that other funds don't. Perhaps you prefer to physically go and speak to an advisor in person, but your fund only offers services online? Some, but not all funds, offer financial advice services to help you set your super savings up in a way that's advantageous for you. Think about how you prefer to manage your super and if the funds' offerings are a good fit.
Responsible, sustainable investing
Super funds that consider environmental, social and governance (ESG) factors are becoming increasingly desirable for Australians. If this is an area that's important to you research funds to find out what their approach to responsible and sustainable investing is, and what sustainable investment options are available. You can learn more about our sustainable and environmental options if you're interested in investing for a greener future.
How to consolidate your super
The process to combine super has become much easier in recent years. You have three options:
- If you're already a UniSuper member you can find your super and consolidate it through your online account. You'll need to provide your tax file number if you haven't already.
- You can go to the myGov website, link your myGov account to the ATO (if you haven't already), select the ‘Super' and then ‘Manage' tabs, and you'll see any super accounts linked to your tax file number.
From here, you can combine your super. You'll be asked to nominate the ‘transferring fund' and the ‘receiving fund', so you need to have made your choice before you action this.
- If you prefer not to use myGov, you can complete a rollover initiation form with the ATO.
Don't forget overseas super
If you've worked overseas, you might have super accounts from previous jobs offshore. It might be time to track down those funds, and request to have the super moved to your Australian fund. There may be a number of effects in doing this such as paying fees or tax so if you're unsure you should consider seeking financial advice.
In summary…
To avoid paying fees and costs for multiple super accounts and to make managing superannuation more convenient, consider consolidating your super. Before taking any action, we recommend doing your research so that you're comfortable knowing you've chosen the super fund that best suits you.