Super consolidation can be super

April 16th 2024 | Categories: Superannuation & SMSF | | Tags: super |

Super consolidation may seem like an unnecessary task now, but it really can make a difference to your overall retirement balance.

Let us paint you a picture: A 44-year old client, Bob, has just had his first Understand meeting with his new Invest Blue adviser. Bob mentioned that he has had an array of jobs in his lifetime, so he knows he has multiple super funds but he has never been sure what to do with them all. Upon investigation, Bob’s adviser finds that he does have several different super funds. Sound familiar?

If you are in the same boat as Bob, don’t worry. In fact, over 4 million Australian’s hold multiple super funds1. Consolidating super is the process of moving your retirement savings from two or more separate superannuation funds into one single fund. However, you might be thinking – if I am not going to be accessing the funds for at least 20 years, why should I bother consolidating my super now?

Reduce fees – don’t waste your super away on admin fees

Every superannuation account comes with its own set of administrative fees, investment management fees, and other costs. Over time, these fees can eat into your retirement savings, potentially costing you thousands of dollars. If you have six different accounts, this can be very detrimental over the long term. By consolidating your super funds, you can eliminate redundant fees and enjoy the benefits of scale. A single account typically incurs lower fees than multiple accounts, ultimately preserving more of your hard-earned money for retirement.

Simplify management – spend less time on life admin

Managing multiple superannuation accounts can be a logistical nightmare. Each account comes with its own paperwork, fees, investment options, statements, and beneficiary nominations, making it challenging to keep track of your overall retirement savings. Not only can this create a headache for you, but it can complicate your estate planning process. By consolidating your super funds into a single account, you simplify the management process for yourself and your loved ones.

Reduce the chance of lost super – don’t lose any of your hard-earned retirement savings

It’s not uncommon for Australians to lose track of their superannuation accounts, especially if they change jobs frequently. Often, these lost super accounts can end up being transferred to the Australian Taxation Office (ATO) as unclaimed super. You may have unclaimed super if you have changed your name and/or moved jobs or changed addresses and not updated these details with your super fund. This is more common than you may realise, with over $16 billion of lost and unclaimed super in Australia2. By consolidating your super funds earlier rather than later, you reduce the risk of losing track of your retirement savings and ensure that you always have access to all your hard-earned superannuation funds.

For more information about finding lost super, visit the Australian Government website here – Searching for lost super | Australian Taxation Office. Or, book in an appointment with an Invest Blue adviser and we can assist you.

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Increase capital – see your full retirement balance in one place

With so much money tied up in lost super or sitting across multiple accounts, you likely have more superannuation than you may think. Consolidation allows you to see your full retirement balance in one place and take advantage of a higher capital base. If your chosen fund is performing well, you will receive most benefit by investing your full super balance within one fund. Add on the benefit of compounding from your regular super contributions, and suddenly your dream retirement starts to seem possible.

Reduce multiple lots of premiums – don’t pay for something you don’t need

If you have multiple super funds, you likely have multiple insurance policies held within each account. Consolidating your supers will ensure you are not paying unwanted premiums and diminishing your super balance across multiple pools of money.

It’s important to note that consolidating your super will mean you may lose your default insurance held within any of the super funds you choose to roll out of. It is important to review your insurance coverage before closing any of your super funds.

Before you consolidate, you should consider:

What insurance cover do you hold inside super?
Have you checked if you have any lost super?
Where are your employer contributions being directed?
Do you have a defined benefit account?
Which super funds investment menu and fee structure is right for you?
Should you keep multiple super funds for a specific reason?

It may seem still seem like consolidating your super early is a waste of time and effort, but over the long term the benefits can be exponential. Consolidating can reduce your overall fees and premium levels, take advantage of one lump sum investment, increase your overall retirement balance and reduce the need for constant administration across multiple accounts. Your retired self really will thank you!

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Even though it will be worth it, reviewing and consolidating your superannuation funds can be a timely and overwhelming process. If you are in the same situation as Bob and have years’ worth of super sitting across multiple funds, you may just not know where to start. An Invest Blue adviser can review your funds for you, come up with a tailored advice plan, and implement the recommendations, all to ensure you are on track to live your best possible life during retirement.

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What you need to knowThis information is provided by Invest Blue Pty Ltd. (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice regarding those matters and seek personal financial, tax and/or legal advice before acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relation to products and services provided to you.