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Super Funds – Should you be changing? Posted on October 9, 2018
There are certain benefits associated with changing super funds. If you have more than one super fund, it may be in your interests to consolidate funds to help reduce fees and administration costs. Having your super in the one place reduces the complexity of your investment, saves you time and may help build your retirement savings.
Is a change right for you?
When making a decision about changing your super fund, you should consider the following factors:
Employer superannuation benefits
Consolidation of funds
Finding lost super
Exit fees and charges
Product disclosure statement for your fund/s
When deciding between your existing fund, an employer’s default fund or another fund, it’s important to consider any potential employer benefits and what insurance options are available to you.
Some employer plans offer additional benefits which may be attractive to you, such as health insurance, rewards for length of service, subsidised insurance premiums and fee waivers.
Before you nominate to remain with your existing fund, check whether this will affect what your new employer contributes.
Ensuring you have adequate insurance cover is always important. Many employer super plans (default funds) offer automatic acceptance, which means each employee in the fund receives an insurance benefit up to pre-defined limits, regardless of any existing cover you might have.
If you wish to join a new employer’s super plan that offers automatic acceptance, and at the same time, maintain your existing plan’s cover, you should contact each insurer to see what options are available. In some cases, the insurer of your new employer’s fund will allow you to ‘rollover’ your current insurance, generally subject to additional medical evidence.
Similarly, your current employer fund’s insurer may allow you to continue your existing cover on a personal basis subject to its underwriting requirements.
Consolidating your super benefits into a single fund can be the first step towards a more powerful investment, by helping you reduce administration costs and fees, and save on insurance.
Selecting from the wide range of funds, each with different fees and insurance benefits, can be a challenge.
Exit fees and charges
By law, every fund must disclose any exit, withdrawal or administration fees. To find out any fees or charges that may apply when rolling your super over to another fund, simply contact your fund or refer to the latest PDS.
Death and disability benefits
Having more than one super account can sometimes mean you are paying for unnecessary insurance. Before deciding to leave your current fund, however, be sure to check whether you may lose any insurance entitlements, and compare the cost of insurance premiums and insurance benefits offered by a new fund.
Track down ‘lost super’
If you have had more than one employer, you may have lost track of some super benefits. It’s important you find these investments to ensure you aren’t paying unnecessary fees. To track down your lost super, refer to statements from each fund, search online using The Australian Tax Office (ATO) SuperSeeker service at www.ato.gov.au/super or call the ATO on 132 865.
Before investing you need to know your ‘risk profile’ which indicates how comfortable you are with investment risk, and how much risk you are prepared to take to achieve the returns you want.
To better understand your investment options, follow these tips:
Educate yourself – read about the types of investment options available and consider the different levels of risk involved.
Monitor your investments – don’t be complacent, and familiarise yourself with your investment and monitor its progress. Check your annual superannuation statements and keep in mind that it is a long term investment.
Know yourself – make sure you feel comfortable with the level of investment risk you are taking. Do your research, so you understand the potential returns from high risk versus low risk investments.
Act now – don’t delay consolidating funds. Reviewing your situation now can help you save administration costs and avoid having to pay more into your funds later in life.
Get quality advice – talk to your financial planner who understands the complexities of super and can help you make the right decision for your needs…
If you would like to learn more about changing Super Funds, click here to contact us.