The more superannuation accounts you have, the more you could be paying in fees. As a young professional, you may have accumulated multiple super accounts from your previous jobs.
Having multiple super accounts can erode your balance due to fees. That’s why it's important to understand how consolidating your super could help you save money and build wealth.
Super account fees: how they work
All super funds charge some form of fees which are deducted from your super balance. So when all else is equal, you could grow your super balance faster with lower fees. For example, when it comes to your super, a 1% difference in fees could equate to 20% in 30 years.
The common fees charged by super funds include:
- Administrative fees - to cover the expenses of running the fund,
- Investment management fees - to cover the costs of managing the investment,
- Transaction costs – incurred when assets are bought or sold, and
- Insurance costs, such as life insurance - included by default in many super funds.
Other fees could include switching fees and advice fees. Your annual superannuation statement, product disclosure statement, and the fund's website will provide information about the fees that you’re paying for your super fund.
What consolidating super means
If you’ve worked multiple jobs, you may have an account with more than one super fund. Having multiple accounts means you’re paying duplicate fees and possibly duplicate insurance premiums. Consolidating super basically means combining all of your super into a single account with one super fund. As the account owner, you can choose which account and combine all of your super together.
While there's no requirement to consolidate multiple super accounts, having one account can be easier to manage, and can minimise fees and paperwork.
How to consolidate super accounts
You can start by reviewing super funds to decide which one is best for you. It might be one that you are already a member of, or it could be a completely new one.
- Fees - Compare the fees charged in each fund. Fees are generally calculated as a percentage of your super account balance and/or a fixed amount.
- Insurance - What insurances do you have with your super accounts? Which policies do you want to keep? And if you’re looking at new super funds, which offers the best insurance options and costs for you?
- Performance - Have a look at the performance of your super funds. You can also check return targets with different investment options available.
- Total balance - Add up the total super you hold, then find out expected fees and returns with each super fund.
After checking the above, you'll get a good idea of which fund might best suit your needs. If it's a new fund, you'll need to open a new account. Ask the super fund how to transfer existing super balances to the new account. You might be able to consolidate over the phone, online, or via mail. Make sure you get all the account details to give your employers.
At Professional Super, you can find all of your old and lost super money using the 'Find or combine my super' feature. You can choose which funds to combine in a couple of minutes. All you have to do is join the fund, then:
- Add your Tax File Number.
- Use the menu to go to 'Find or combine my super'.
- We’ll then send you a security code via SMS. Once you enter the code, you will see all of your funds including any lost super. From there you can select which accounts, and how much you want to combine.
Notifying employers
When you start your new job you will need to complete a superannuation standard choice form. To nominate your super fund, go to Section A and select the right option. These can often cause confusion, so you may want to contact your super fund and get their help completing the form.
You can change where your super is paid even when you’re not starting a new job. You just need to notify your employer of your new super fund details.
At Professional Super, we’ve made it easy to notify your employer. Just go to our “Tell my Employer” page and press send. Then we’ll email you a pre-filled form with all the details your employer needs.
Getting your super organised
Having multiple super funds can cost a lot of money and erode your super balance. At Professional Super, we’ve made it easy to get your super organised. And it only takes a few minutes. If you need more help, speak to our team today.
