Over the many years we’ve had countless conversations with clients who are overwhelmed by the number of superannuation accounts they’ve accumulated over the years. For many Australians, switching jobs or industries has meant inadvertently creating multiple super accounts, each carrying its own fees, paperwork, and complexities. If this sounds familiar, rest assured—you’re not alone. But with some straightforward steps, consolidating your super can help you streamline your finances, save money, and take greater control of your future retirement savings.
Let’s walk through the benefits of consolidating your super and how you can do it without the headaches.
Why Consolidate Your Super?
Having multiple superannuation accounts can chip away at your retirement savings without you even realising it. Each super account usually comes with its own set of fees, and if you’re not regularly tracking them, these fees can quietly erode your balance. By consolidating, you’re pooling all those smaller accounts into one, reducing fees, and simplifying your super so it’s easier to manage.
The Benefits of Consolidating Your Superannuation
1. Reduced Fees
Every superannuation fund charges fees for management and administration. When you have multiple accounts, you’re paying fees on each of them, and these costs add up over time. By consolidating into a single account, you’re only paying fees on one fund, which could potentially add thousands of dollars to your balance by the time you retire.
2. Easier to Track and Manage
Having all your super in one account allows you to easily track performance, contributions, and overall growth. This single-view approach means you’re less likely to lose track of your super, and you can make informed decisions about investments and retirement planning.
3. Prevent Lost Super
Did you know that over $16 billion in lost and unclaimed super is sitting with the ATO? When super is spread across multiple accounts, it’s easy for smaller balances to get overlooked. By consolidating, you’re keeping all your money in one place, so none of it gets left behind.
4. Better Investment Potential
With a larger, consolidated balance, you may gain access to more investment options within your fund or even benefit from a more robust fund performance. Bigger balances can sometimes unlock better opportunities that are off-limits to smaller accounts.
5. Simplified Paperwork
Consolidating your super reduces the number of statements and paperwork you’ll have to manage. This is particularly helpful come tax time, when keeping track of fewer accounts makes it easier to stay organised.
Things to Consider Before Consolidating
While the benefits are substantial, there are some considerations to keep in mind before you go ahead with consolidation.
Insurance Coverage
Many super accounts come with insurance policies like life insurance, total and permanent disability (TPD) insurance, or income protection. If you close a super account, any insurance coverage associated with that fund may be lost. Before consolidating, check if any of your accounts offer valuable coverage you’d like to keep, and compare insurance options with your chosen fund.
Exit Fees
Some funds charge exit fees when you transfer your balance out. These fees have become less common but can still apply, so it’s wise to review your super fund’s policy to ensure you’re not hit with unexpected charges.
Tax Implications
While generally minimal, there can be tax implications if you’re moving significant amounts, especially if you’ve made after-tax contributions. If in doubt, consulting with a tax professional or advisor is always a good idea to ensure you’re making the best choice.
How to Consolidate Your Superannuation Accounts
If you’ve weighed the pros and cons and decided that consolidating is right for you, here’s a simple guide to get you started:
1. Find All Your Super Accounts
Start by logging into your MyGov account, where you can use the ATO’s online services to search for all your existing super accounts. You may even find “lost” super that you had forgotten about!
Helpful Link: The ATO’s guide on finding lost super https://www.ato.gov.au/Individuals/Super/In-detail/Growing-your-super/Keeping-track-of-your-super/?page=6Finding_lost_super_and_unclaimed_super_money
2. Compare Your Funds
Take some time to compare the fees, performance, and insurance options of each super account. The Moneysmart Superannuation Calculator https://moneysmart.gov.au/superannuation-calculator is an excellent resource for comparing funds based on your financial goals.
3. Choose the Account to Keep
Select the fund that offers the best balance of low fees, solid past performance, and suitable investment options. Ideally, this is the fund you’ll consolidate everything into.
4. Initiate the Transfer
You can initiate a transfer by logging into MyGov and following the prompts or by contacting your chosen super fund directly. Transfers can take some time, so be sure to monitor the process to ensure everything is successfully merged.
5. Update Your Employer
Once you’ve consolidated, notify your employer of your new super account details to ensure future contributions go to the correct fund.
Additional Tips and Resources
Consider Professional Advice
While consolidating your super is often a straightforward process, there can be complexities. If you’re unsure, seeking professional advice can help you make the best decision for your unique situation.
Stay Engaged with Your Super
Don’t set it and forget it! Regularly check in on your super, review your investment options, and ensure your fund’s performance aligns with your retirement goals.
Take Charge of Your Super
Consolidating your super is a simple but powerful way to take control of your financial future. By reducing fees, simplifying your management, and maximising your growth potential, you’re setting yourself up for a more secure retirement. Here at TSP Accountants, we’re passionate about helping clients make informed financial choices, so if you have any questions about consolidating your super, reach out to us.
Ready to start your journey towards a better superannuation plan? Contact us at TSP Accountants & Business Advisors, and let’s explore ways to maximise your savings for a secure, rewarding future.