Turn on your TV, read any number of personal finance magazines, or browse the internet for superannuation funds, and chances are you will be inundated with invitations to ‘consolidate your super’. So, is this something you should be doing and do you really need to consolidate your super?
It is a well-known fact that Australians have multiple superannuation accounts. In fact, it is not uncommon for a person to have three or four separate accounts with different super funds. Often these accounts only hold small balances. Generally, what happens is we change jobs and our new employer asks for our super fund details so they can make their contributions. We often don’t have the details available so it is simpler just to tick the ‘default fund’ box on the super fund form.
And if we change addresses, it is very common to lose track of the super we have. It becomes ‘lost’. In fact, at last count, there was approximately $16 billion in lost super being held by the Australian Taxation Office. Believe it or not, the tax man is keen to reunite this lost super with their rightly owners. One way to avoid losing super is to keep track of it. And to do that, having all your super in one place – one super fund – makes a lot of sense. Consolidating multiple superannuation accounts with different funds, into a single superannuation account is a fairly straightforward process. It is one that your preferred super fund will often do for you.
The great majority of superannuation funds charge their members administration fees. These fees will generally be expressed as a flat fee per week, month or year, and are often in the vicinity of $1.50 to $2.00 per week. On top of that, funds may charge a fee that is based on a percentage of your account balance. So, if you are a member of four superannuation funds that each charge an administration fee of $1.50 per week, the total fees you will pay over the course of a year is $312. If all your super was in one superannuation account, you would only be paying $78 for the year. It is only a small saving but every little bit counts.
When you close your super accounts, you lose your insurance cover. Before consolidating any super, pay close attention to any insurance you may have. And if you need the cover, make sure you have a new policy in place before you cancel any existing cover. Importantly, seek advice before consolidating your super to ensure you don’t accidentally cancel any important insurance cover you may require.
This article was written by Peter Kelly of Centrepoint Alliance: