Do you have multiple super accounts from previous jobs? If so, you’re certainly not alone! Many Australians accumulate several superannuation funds over their working lives, often without realising the financial implications. These scattered accounts can lead to a maze of duplicate fees, confusing paperwork, and a less-than-optimised investment strategy.
The good news? Learning how to consolidate super is a straightforward process that can simplify your finances and potentially boost your retirement savings.
Why Consolidate Your Super? The Undeniable Benefits
The decision to consolidate superannuation accounts isn’t just about tidiness; it comes with tangible financial advantages that can make a real difference to your retirement nest egg.
Reduce Fees and Charges
This is arguably the biggest financial win. Each super account typically charges administration fees, investment fees, and sometimes other miscellaneous charges. When you have two, three, or even more accounts, you’re paying these fees multiple times.
Consolidation means paying just one set of superannuation fees, freeing up more of your money to grow over the long term. Even small savings on fees can compound into thousands of dollars over decades.
Simplify Management and Administration
Imagine receiving just one annual statement, logging into one online portal, and tracking your investments through a single app. Consolidating super drastically cuts down on paperwork and makes it far easier to keep tabs on your retirement savings, monitor performance, and make informed decisions.
Optimise Your Investment Strategy
With all your super in one place, you gain a clearer overview of your total balance. This allows you to implement a more cohesive and tailored investment strategy that aligns with your risk profile and retirement goals. You can ensure your entire super balance is working effectively towards your future.
Avoid Lost Super
According to the Australian Taxation Office (ATO), over $17.8 billion in super remains unclaimed or “lost” by Australians. When you have numerous accounts, it’s easier for one to slip through the cracks, especially if you change addresses or names.
Consolidating your super into a single active account significantly reduces the risk of your hard-earned money becoming lost and harder to access later on.
Essential Checks Before You Consolidate Super: Don’t Make a Costly Mistake!
While the benefits of super consolidation are clear, rushing into it without proper due diligence can lead to unintended consequences. Before you combine super funds, it’s crucial to perform a few essential checks.
Insurance Coverage
This is perhaps the most critical consideration. Many super funds offer default insurance cover Death, Total and Permanent Disability (TPD), and Income Protection to their members.
- Assess Current Cover: Carefully review the type, level, terms, and cost of insurance in your existing funds. Do you have a valuable policy that would be difficult or more expensive to replace?
- Pre-existing Conditions: If you have any pre-existing medical conditions, obtaining new insurance coverage might be more challenging or come with exclusions. Losing existing cover could leave you underinsured.
- Transferring Insurance: Some funds may allow you to apply to transfer your existing insurance cover to your new consolidated fund, but this is not guaranteed and requires a separate application process and underwriting. Don’t assume your insurance will automatically transfer.
Fees and Charges (Deep Dive)
Beyond just the total cost, understand the breakdown of fees.
- Administration Fees: Fixed annual fees or a percentage of your balance.
- Investment Fees: Charged for managing your investments.
- Other Fees: Look out for less common fees like performance fees, advice fees (if applicable), or buy/sell spreads.
- Exit Fees: While largely removed by law, some older legacy products might still have exit fees. Always check your old fund’s Product Disclosure Statement (PDS).
- Comparison Tools: Utilise the ATO’s YourSuper comparison tool and other independent websites to compare the fees and historical performance of different funds.
Investment Options & Performance
Your chosen fund should align with your investment philosophy and risk tolerance. Review the range of investment options available (e.g., conservative, balanced, growth, ethical). Look at the fund’s long-term historical performance, but remember that past returns do not guarantee future performance.
Potential Tax Implications
- Notice of Intent to Claim a Tax Deduction (NOITC): If you’ve made personal (after-tax) contributions to an old super fund and intend to claim them as a tax deduction, you must submit a “Notice of Intent to Claim a Tax Deduction” form to that specific fund before you roll over the money. If you consolidate super first, you will lose the ability to claim that deduction.
- Defined Benefits Super Funds: This is a major warning. If you are a member of a “defined benefits” super fund (often found in older public sector or corporate roles), you should seek independent financial advice immediately before even considering a transfer. These funds have unique and often valuable entitlements (e.g., based on salary and length of service) that can be irrevocably lost if you transfer out.
Employer Contributions
If your employer currently pays into one of your old super accounts, make sure you understand how to update them with the details of your new, chosen consolidated fund. This ensures all future super guarantee contributions go to the right place.
Consolidating Super: Your Step-by-Step Guide
Step 1: Gather Your Super Account Information
Start by collecting details for all your existing super accounts, including your old statements, member numbers, and fund names. Don’t worry if you don’t have everything; the next step can help fill in the blanks.
Step 2: Find Your Lost Super
The easiest way to locate all your super accounts, including any “lost” or unclaimed super, is through the Australian Taxation Office via your MyGov account.
- Log in to MyGov and link to the ATO.
- Navigate to the super section. Here, you’ll see a list of all super accounts linked to your Tax File Number (TFN). This includes active, inactive, and any lost or unclaimed super money.
Step 3: Choose Your Preferred Super Fund
Based on the essential checks you performed earlier (fees, investment options, insurance, and performance), decide which super fund you want to keep and consolidate all your other super into. This could be your current active fund or a completely new one you’ve researched.
Step 4: Initiate the Consolidation
There are two primary ways to combine super funds:
- Via MyGov (ATO Online Services) – Recommended: This is generally the quickest and most efficient method.
- From the super section in your linked ATO account via MyGov, you’ll see an option to “Transfer super” or “Combine super.”
- Follow the prompts to select the accounts you wish to roll over and nominate your chosen fund.
- Transfers initiated through MyGov are generally processed electronically and can be completed within a few business days.
- Directly Through Your Chosen Super Fund
- Contact your preferred super fund and inform them you wish to roll over funds from other accounts.
- They will provide you with a form (often called a “superannuation rollover form”) where you’ll need to provide details of your old super accounts.
- Your new fund will then contact your old funds to initiate the transfer on your behalf. This method can sometimes take longer than using MyGov.
Step 5: Notify Your Employer
Once you’ve consolidated your super, it’s crucial to provide your employer with the Super Standard Choice Form for your chosen fund. This ensures that all your future super guarantee contributions are directed to your newly consolidated account.
Step 6: Monitor Your Consolidated Account
After a week or two, check your new fund’s online portal, app, or recent statements to confirm that all funds have been successfully transferred from your old accounts. Continue to regularly monitor your account’s performance and ensure your details are up to date.
When is Consolidating Your Super the Right Move (And When to Be Cautious)?
Deciding to consolidate super is usually a wise financial move, but there are specific scenarios where it’s particularly beneficial, and others where caution is advised.
Excellent Reasons to Consolidate:
- High or Duplicate Fees: If you’re paying multiple sets of fees across several accounts, consolidating is almost always beneficial.
- Simplifying Financial Administration: If you find managing multiple accounts confusing or time-consuming.
- Better Investment Options: Your chosen fund offers superior investment performance or a wider range of options that better suit your goals.
- Life Stage Changes: As you approach retirement or other significant life events, having a single, clear view of your super makes planning easier.
When to Exercise Caution:
- Valuable, Irreplaceable Insurance: As discussed, if an old fund provides critical insurance cover that you cannot replicate or transfer due to health conditions or cost, you might consider keeping that account open, even if it means paying two sets of fees.
- Defined Benefits Funds: Always, always, always seek professional financial advice before moving money from a defined benefits fund. The unique entitlements could be lost forever.
- Short-Term Performance Chasing: Don’t consolidate purely based on chasing last year’s top-performing fund. Focus on long-term performance, fees, and alignment with your financial plan. Be sure to get quality superannuation advice.
Understanding Recent Super Reforms: Stapled Funds & Inactive Accounts
Recent changes to superannuation laws in Australia have made it even easier to track and combine super funds, while also addressing issues like duplicate accounts and “zombie insurance.”
“Stapled Funds”
Since November 2021, your super fund is now “stapled” to you. This means that when you start a new job, your employer must pay your super contributions into your existing (stapled) fund, unless you actively choose a new fund. This reform aims to reduce the creation of multiple accounts as you move between jobs.
Inactive Accounts & “Zombie Insurance”
Reforms have also targeted “zombie insurance” – insurance policies held on inactive super accounts that slowly erode balances through fees. If an account hasn’t received contributions for 16 consecutive months, the insurance cover on that account is automatically cancelled.
This reform highlights another benefit of superannuation consolidation: ensuring your insurance is held within an active fund where your contributions are regularly paid.
When to Seek Professional Financial Advice
While this guide provides a comprehensive overview, it’s not a substitute for personalised financial advice. It’s highly recommended to seek professional guidance if:
- You are a member of a defined benefits super fund.
- You have complex insurance needs or specific health conditions that make obtaining new insurance challenging.
- You have a significant super balance and want tailored investment advice.
- You are unsure about the tax implications of your specific situation.
A qualified financial advisor can assess your unique circumstances and help you make the best decision for your retirement savings.
Need Help Consolidating Your Superannuation?
Taking the step to consolidate your super is a powerful way to simplify your finances, reduce unnecessary fees, and potentially boost your retirement savings.
Don’t let your super get lost in the shuffle! Gain greater control over your financial future with the help of expert financial advisors.
Schedule a consultation with 360 Financial Strategists to kickstart the process of your super consolidation today.
