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With spring upon us why not include a tad of financial hygiene with your annual cleaning spree, namely your super. According to the APRA Annual Superannuation Bulletin the average superannuation member has almost three separate super accounts. This is a little staggering given we only really need a single vehicle to carry us to retirement.
A range of benefits come with consolidating or ‘rolling over’ your varioussuper funds into a single account. It has the real potential to save you from duplicating fees. It also means less paperwork. Most of all it will make it much easier to monitor and control your fund which will no doubt get you more engaged with your nest egg. And so it should considering these are your retirement savings after all.
What to consider
Sometimes however, consolidating your super could put you in a worse position, a bit like sweeping dirt under the carpet. There are a few things you must consider before you undergo the super cleansing process. These include:
- Be sure to review if there any significant termination fees, these costs could outweigh the benefits.
- If you’re self-employed and wish to claim a tax deduction on a previous contribution make sure you lodge a notice of intent to claim a tax deduction with your original fund before consolidating.
- If insurance cover is held within your existing super funds the cover will be forfeited if you roll over the entire balance. Consider the terms and conditions of your existing insurance and super fund before making any changes as replacing the insurance could be difficult.
- It’s important to examine the differences in the investment choices between your existing and new super funds. Confirm whether the investments in your new fund offer an appropriate level of risk suitable for your own risk profile
Choosing a fund
When consolidating your super, don’t just choose the fund with the highest balance. The best fund for you may be one of your small accounts, or a completely different one altogether. Be sure to consider a solution which best fits your requirement for investment choice and cost whilst coupled with your own level of expertise and desire to control.
Retail super funds typically offer a larger number of investment of options but charge higher fess whilst Industry funds typically offer a more limited investment menu with lower fees. Self-Managed Funds offer virtually unrestricted investment choice but require a larger level of funds and higher level of expertise and time.
How to roll over your super
Superannuation rollovers are extremely easy. You can do this online at mygov.au or you can transfer your super by using a form and sending it to your chosen fund. Some funds have an online process for combining your super too. The most important thing is to take control of your financial future and ensure that your retirement nest egg is safe and sound.
Source: bodyandSoul
