Myths About Consolidating Your Superannuation
Consolidating your super means moving all your superannuation into one account. It can make your super easier to manage, help to save money on fees and ensure your funds invested in a consistent manner.
However, before taking any action, there are some key myths to understand when it comes to consolidating your super.
Myth 1: Consolidating your super is hard
Consolidating your super has been made easy, by following a few simple steps on the ATO Portal in your MyGov account, you are be able to view and consolidate your super accounts online.
Myth 2: You must use your employer’s super fund
Typically, you do not have to use your employer’s super fund if you have an alternative fund that you would like to contribute to. Your employer may offer you the option of joining their fund, however, if you are eligible, you do not have to take it. It is important to consider if your employer has an employer sponsored or employee super plan, as joining a fund such as this may provide you with lower fees and employer funded or reduced insurance premiums.
Myth 3: You have insurance to fall back on
Life, income protection and disability insurance policies are often held inside your super fund. This may be automatic cover or underwritten cover that you have applied for. Consolidating your super means that when your fund is closed, the insurance held inside the account is automatically terminated, which can become a problem for several reasons. If you don’t have a policy for the adequate amount of cover in your new fund, you are no longer covered. Even if your new fund does have cover, the newer policy may be different in the cover it offers (quality, price, terms), so you may be left worse off by inadvertently cancelling a better-quality cover. Lastly, it is important to note if have any pre-existing health conditions, or if your policy has been accepted under special terms. Where you may have been eligible to make a claim under an older policy, this may not be an option under the newer policy.
Myth 4: Insurance eats away at super
Your super fund may provide you with insurance so that you and your family are protected in case something happens to you. Some super funds will come with automatic insurance cover, or you can choose to opt in, opt out or adjust your cover. You can make these changes at any time by logging into your online account, calling the super fund or your adviser. You can then choose to reduce or cancel your cover or apply to increase the cover – which will give you an indication of the cover options available, sums insured and premium amounts. It is important to note that while you do typically pay a fee for insurance, that most people are uninsured. If you have a family, a home loan or other debts, it is important to consider how you and your family would survive if you passed away or were unable to work. Holding onto a lower balance super fund with insurance can be an appropriate way to protect your situation.
Things to do before consolidating your super:
- Check your employer contributions.
Check your current account to see where your employer is currently contributing, and check to see if changing funds will impact how your employer contributes. Some employers are only able to contribute to certain funds.
- Check your insurance cover.
Before you leave a fund, it is critical that you check to see if you hold any insurance cover inside the fund, such as life, total and permanent disability and/or income protection. If you change funds, your cover will cancel, and you may not be eligible to get the same cover. This is particularly crucial if you have any pre-existing medical conditions or are over aged 60.
- Tell your employer.
Whether you choose a new super fund or one of your existing ones, ensure you supply your employer with the details they need to pay your super into your chosen account. Your employer will likely need a form to be completed to make the change.
- Contact us.
Before consolidating or transferring any super funds, please contact our team to assist.