Super consolidation can seriously save you

If you have more than one superannuation account, it could be time to consolidate them and save a stack of money at the same time.

Is your letterbox overflowing with superannuation statements from different funds? Now is the time to consider consolidating your funds. This simple act will save you fees, reduce paperwork and help you keep track of your retirement nest egg – and the good news is, it’s simpler than ever to roll them over.

Super consolidation

Multiple funds are costing you

Australians are wasting thousands of dollars, shelling out money in fees because they have multiple superannuation accounts. According to the Australian Taxation Office (ATO) statistics 43 per cent of over 14.8 million Australian who are super fund members have more than one super account.

These are easy costs to rack up, especially for young Australians who may open up accounts for each new job they start and then lose track of these multiple accounts.

“Young people are often mobile in the workforce and it’s not uncommon to open a new account when they start a new job, instead of taking their preferred fund account with them,” says John Shepherd, ATO Assistant Commissioner of Superannuation.

According to the ATO there are $14 billion worth of unclaimed super money and Australian Prudential and Regulation Authority (APRA) figures show the median figure for fees and charges paid by Australians for a low-cost superannuation account is $532 per year.

If you have more than one account, you see how these figures stack up.

Why consolidate

More and more Australians are getting on board with consolidation. According to the ATO there has been a significant increase in Australians merging their super into one preferred account. In fact, more than 265,000 accounts with balances totalling $1.13 billion have been consolidated in the six months to December 2014.

Why? Well, besides saving you money by paying only one set of fees, having only one fund means that you can also more easily keep track of your super and how it is performing. This will enable you to be more engaged with your fund, allowing you to investigate the other benefits, such as insurance or how you allocate your assets.

One word of warning though, if you’re in a defined benefit fund (commonly held by government employees), seek out advice before leaving it. Unless your benefits are fully yours or ‘vested’, you could lose part of them if you choose another fund.

Bringing it all together

Before you go ahead and consolidate your funds, the ATO recommends that you check some important things:

    Will you get slapped by any termination fees if you exit a fund?
    Look at your insurance and ensure that you get the same level of coverage at your chosen fund.
    Make sure your employer can actually put money into the fund you want to contribute to.

When making a choice, don’t automatically choose the fund with the highest balance (although this might seem to be the obvious choice). Shop around and see if a different fund might suit your needs better, or explore the possibility of a self-managed super fund (SMSF).

Get moving

Once you’ve decided which fund you want to choose, consolidating your super shouldn’t be too much of a headache.

You can do this online via myGov, by creating an account and then going to the Super tab.

Once you have linked the ATO to your myGov account the transfer process usually only takes ten minutes and will be processed in three working days. Another benefit is that you don’t need to provide certified documents to super funds as you have done in the past.

Another option is transferring your super by using a form and sending it to the fund you have chosen and some funds also have online functionality to assist you.

While consolidating may take a bit time, it is much easier these days than it used to be – and it will benefit you and your retirement nest egg in the long run.

If you would like to learn more about SMSFs, download an information pack. If you’re ready to establish an SMSF, you can apply now with ESUPERFUND.

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