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What to consider when choosing a super fund

Last Updated at August 26th 2021
It is pretty easy to set and forget about your super - which isn't always a good thing. You should be checking your superannuation at least once a year to see if it is performing well.

Key points:

  • It's important to keep an eye on the performance of your super account at least once a year

  • Changing super funds is relatively easy, choosing a new provider is the hard part

  • Having more than one super fund means you are paying a lot more fees

A couple looking for a new superfund
No one should set and forget about their super - you should consider changing to a new fund if your provider isn't performing. [Source: Shutterstock]

It's important to have an idea of how your super is growing, if it fits your current risk profile, or if it provides any benefits.

If you decide that the super fund isn't providing you with the returns you were hoping for or doesn't provide good benefits, then it might be time to consider changing to a new super fund provider.

You may want to leave the super fund you were required to have when you were working in a specific industry, like education or health, or simply choose one that you feel will give you better returns. 

Changing super funds is relatively easy, the main challenge is choosing what super fund you will be going to instead.

Choosing a super fund

There are a number of indicators of whether a super fund is the best fit for you, including their performance over the last few years, the fees they charge, and additional services that are included.

Things to consider when choosing a super fund:

  • Performance

The performance of a super fund has a direct impact on the growth of your super. Don't just look at their current performance, but how they have managed over the last few years performance-wise. Comparing the performance of different super funds over five years or so can give you an indication of whether a super fund will give you the returns you are looking for. Keep in mind, just because a super fund has done well in the past doesn't necessarily mean it will in the future, which is why you should regularly monitor your super.

  • Insurance coverage

Most super funds provide insurance for their members, whether that be life insurance, income protection, or total and permanent disability (TPD) insurance. Some providers automatically include some of the above insurances, whereas some don't and it may be a separate add-on. Having insurance through your super can result in cheaper premiums, but it does impact your balance as you will be paying for this coverage through your super account.

  • The right investment option for you

If you are changing your super to a new provider and you are over 60, you need to carefully consider what investment option you choose. Everyone has a different risk profile and your age can have an impact on that. Many retirees tend to have a balanced or conservative super account in their later years. It depends on your current financial situation and how long you are off from retiring.

  • Fees and charges

Fees can cut into your super, which is why it's important to understand what you are getting yourself into. Some funds may seem attractive because they have low fees - however, this could mean the returns won't be as high. Super funds fees can include investment fees, buy and sell fees, membership fee (yearly), administration fees, and advice fees.

  • Extras and benefits

Each super fund has its own benefits and extras in place as an incentive to join. Some of these benefits may be of use to you and could be something to get you over the line and join. For instance, a lot of providers offer financial advice (free or for a fee), gym membership discounts, shopping discounts, and more. 

  • How a fund invests 

When you're looking into a potential new super fund, make sure you understand how they invest your super because this can tell you a lot about how they manage risk. Ethical super funds are becoming more popular with people preferring to invest in renewable energies or anti-oil options. But it's not necessarily just a moral decision. If a super fund is investing mostly in non-renewable resources or doesn't have a diverse portfolio, it can mean they are putting all their "eggs in one basket" or in a sector that doesn't have longevity, which is not what you want when dealing with your money.

Changing super process

The process of changing your super is really easy these days and shouldn't take longer than five minutes to organise with the new super provider you have chosen. 

Either you can organise it through your new provider, who will usually be able to manage the whole transfer themselves, or you can fill out an Australian Taxation Office (ATO) rollover form.

To see where your super is currently sitting, you can visit your my.gov.au account, select the Australian Taxation Office (ATO), click on super, and select Transfer super.

There you will be able to view all of your super accounts as well as move your balances between accounts, and even consolidate it all in one account.

Consolidating your super

When moving to another super, and you have multiple super funds, it may be a good time to consolidate all your super into one account. 

Over your lifetime due to different jobs, you may end up with more than a few super accounts across different providers without realising. This isn't always a good thing, because it means you will be paying more in fees overall than if you just have one super fund.

When you move to another super fund, make sure all your super from every account is brought across.

Consolidating your super means you are saving money on fees and have a better idea of how your super balance is growing.

Leaving a super fund

If you decide to leave a super fund, you will need to prepare for any loss of services that might occur. For instance, you might lose some entitlements such as life insurance that are connected to your super. 

Additionally, if you have a medical condition or are over 60, it may be harder to get similar insurance coverage to what you had before when changing to a new super provider. To make things more difficult, life insurance can stop between 65 to 70 years of age.

To keep people on board, some super funds provide extra incentives for people to stay with them, like free financial advice, shopping discounts including gym memberships or travel deals, or non-super investments.

You will lose these benefits if you go to another super fund, so it's a good idea to know if you will receive the same benefits from your new provider, especially if you are reliant on those additional benefits.

Superannuation funds are no longer allowed to charge you an exit fee so it won't cost you anything if you decide to change to a different fund. 

Of course, all benefits and entitlements from super funds are valued differently between yourself and others, so take stock of what is important to you.

Review your performance every now and then

Just like why you are deciding to move to another super fund now, you should always keep an eye on the success of your super funds. 

If it is not performing well or the fees are just not justifying the performance, then it could mean a change of super funds.

Always review your super or at least check your annual statement that is delivered once a year during June.

Lastly, if you are still working, remember to let your workplace know you are changing super funds!

Why have you decided to change super funds? Tell us in the comments below.

Related content:

What a financial advisor can do for you
Planning for a secure retirement
Building your nest egg for retirement
How to continue funding your new life in retirement

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