The latest personal finance tips and insights for Australians at home and abroad

How Do I Consolidate My Superannuation?

Superannuation - Ally Wealth Management

At the most recent estimate in March, 2021, it was suggested that there’s approximately $13.8 billion of Australians’ hard-earned dollars out there in lost and unclaimed superannuation. Given that superannuation is one of, if not the most tax-efficient way that most Australians have to save for their retirement, this figure is certainly alarming for a number of key reasons. Australia has one of the most robust and significant pension and retirement savings systems in the world, and for many Australians, this will be the main source of their retirement income when they decide to stop work.

This week our team at Ally Wealth Management explores how you can both find and consider consolidating your superannuation from multiple accounts.

First, let’s consider why you should think about consolidating your superannuation.

First of all, it often means a reduction in the administrative burden of trying to manage multiple superannuation accounts. Multiple statements, multiple login details to remember and keep track of, multiple investment strategies to monitor and ensure are aligned to your risk profile…the list goes on.

Secondly, having your superannuation in one account allows you to track and monitor your investment and contribution strategy much easier. You will be able to compare the performance of your portfolio to relevant benchmarks, monitor how much you’ve contributed to your superannuation and any top-ups you should consider, and keep a much closer eye on your retirement savings.

Third, consolidating your superannuation into one account could mean a significant reduction in fees. Many superannuation funds will incur administrative fees to cover the costs of the operations of your superannuation fund, which are often payable for each account that you have. By considering consolidating your superannuation, you will also be able to benchmark the fees and expenses of your super fund relative to others.

Finally, you may find that you have multiple insurance policies inside your superannuation funds, which you may not need. By having the one, or at least less, superannuation accounts you can also easily monitor your current insurance policies and the premiums that you’re paying to keep your cover active.

Now that you understand the why, let’s explore what you should consider

There are a wide range of factors to consider before consolidating your superannuation, and you may wish to seek professional advice here to ensure that you’re not missing out on benefits tied to your current superannuation accounts. Here we’ve outlined some of the key factors to consider before shifting your superannuation anywhere:

  • Defined Benefit vs Defined Contribution Scheme: In years gone by, many superannuation and pension funds were structured as Defined Benefit or Deferred Benefit schemes, which meant that a fixed percentage of your last drawn salary was paid to you when you retired until the day that you pass away. When the life expectancy was in the 60’s, this was affordable, however now that life expectancies for most are in the 80’s and 90’s, these have largely been phased out. It’s important to review the structure of your scheme before shifting your superannuation anywhere.
  • Existing Insurances: You should check if you have any Life, Total & Permanent Disability or Income Protection insurance policies within your super fund. They may be appropriate for you, and you may not be in a position to easily take out alternative cover, particularly if you’re an Australian expat or if you have pre-existing conditions.
  • Contribution Eligibility: You may also want to consider whether the superannuation fund you’re considering switching into will allow contributions from your employer, or even from yourself particularly if you’re an Australian expat. It’s also important to check the costs involved in adding funds to your superannuation account such as brokerage or other investment costs.

There are other factors to consider here such as costs, any other benefits tied to your super fund, and the investment strategies that you’re seeking to implement before you look to shift your superannuation anywhere.

Once you’ve done your homework, how do you shift your superannuation.

Once you’ve carried out your assessment, and worked out where you’re planning to consolidate your superannuation to, then you can typically go about the consolidation of your superannuation either via the receiving fund (i.e. the fund that you’re seeking to use as your primary super account) by completing their documentation to rollover funds into their platform, or doing so via your MyGov account.

If you haven’t already, be sure that you set up your myGov account here. This will allow you to monitor your Australian tax returns, declare your worldwide income if you still have a HECS / HELP student loan that needs to be repaid, and carry out a number of other key tasks.

Of course, if you’re working with a Financial Planner, they will take care of the superannuation consolidations and rollover for you, and ensure that the primary fund being selected as the most appropriate for you is truly aligned to your risk profile and financial goals.

Ally Wealth Management is the trusted ally in finance for Australians at home and across the globe. As both Australian expats and residents, the founders of Ally have a unique understanding of the common personal financial challenges faced.

Book your complimentary appointment with our team at Ally Wealth Management to discuss how we can help you to achieve your financial goals.

Ally Wealth Management Pty Ltd is a Corporate Authorised Representative of Sentry Advice Pty Ltd ABN 77 103 642 888. Sentry Advice holds an Australian Financial Services Licence (AFSL) No. 227 748.

General Advice Warning: The information contained herein is of a general nature only and does not constitute personal advice. You should not act on any recommendation without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances.

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