Switching Super Funds: A Guide For Australians

Changing super funds in Australia is a straightforward process that can be done online. It is important to compare fees and costs, investment options, and the level of risk associated with each fund before making a switch. Individuals should also consider the benefits provided by their current fund, such as discounted insurance cover, and check if they are required to be a member of a specific fund per their employment agreement. Before switching, individuals should open an account with the new fund and inform their employer to ensure contributions are made to the correct account.

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Check for benefits and insurance cover

Before changing super funds, it is important to check if your current fund provides any benefits and insurance cover. Some super funds offer basic insurance cover, which includes death cover (also known as life insurance), total and permanent disablement (TPD) cover, and income protection. This basic insurance cover provides financial protection in the event of death, illness, or injury. It is worth noting that income protection through super typically covers total or partial disablement, but may not cover redundancy or lack of shifts.

When reviewing your current super fund's benefits and insurance cover, consider the following:

• Net benefit: Compare the net benefit, or investment return, you receive from your super fund after all fees and costs have been deducted. This can help you understand if you are getting a good return on your investment.
• Insurance options: Evaluate if the insurance options provided by your current super fund align with your needs. Consider life insurance, disability cover, and any other types of insurance that may be relevant to your situation.
• Values alignment: Assess if the values of the super fund match your own. For example, you may want to choose a super fund that focuses on socially responsible investments.
• Fund type: Understand the differences between industry super funds and retail super funds. Industry super funds are 'profit-to-member' organisations, while retail super funds return profits to shareholders. The way they distribute profits can impact your benefits and overall returns.
• Fees: Super funds charge various fees, including administration fees, investment fees, and insurance premiums. Compare these fees across different super funds to ensure you are not paying more than necessary. Lower fees mean more of your super can stay invested and grow for your future.
• Performance: Review the investment performance history of your current super fund over several years to assess if it meets your expectations.
• Beneficiary: Check if you have nominated a beneficiary to receive your super and insurance money in the event of your death. You can choose a non-binding beneficiary, where the super fund considers all nominated beneficiaries and makes the final decision, or a binding beneficiary, where your written direction is legally binding.
• Loading: Understand if you have any extra costs applied to your cover due to your medical history. While your current super fund may not charge loading, other funds or insurers might, so it's important to disclose this information when applying for cover with a new fund.
• Work-related benefits: Your current super fund may provide benefits based on your industry or occupation, such as discounted insurance cover. Make sure you factor these benefits into your decision-making process.

Remember, super funds in Australia cannot charge exit fees when changing super funds. However, there may be other costs associated with administration, such as fees related to liquidating your investments. Always confirm these details with your current fund to avoid unexpected expenses when switching funds.

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Compare fees and costs

When comparing super funds in Australia, it is important to consider the fees and costs associated with each fund to ensure you are getting the most out of your superannuation investment. Super funds typically charge fees to cover the cost of managing your super and investments. These fees can include administration fees, investment fees, transaction costs, and taxes. Some funds may also charge additional fees for special services, such as financial advice or splitting your super after a separation.

To compare fees and costs between different super funds, you can utilise various tools and resources. One option is to use the ATO's YourSuper comparison tool, which allows you to compare fees and investment returns based on your personal super balance. This tool provides a personalised version through myGov, enabling you to view and compare your existing MySuper products. The non-personalised version uses a default super balance of $50,000, but you can edit this value and add your age to tailor the results.

Another source of information is the product disclosure statement (PDS) provided by each super fund. Every fund is required to disclose their fees in a standard table format, making it easier to compare different options. Additionally, you can refer to super comparison websites offered by private companies, such as SuperGuide, which allow you to compare multiple super funds for free, including their multi-year returns and fees.

It is worth noting that fees may change over time, and it is important to regularly check the fees you are paying to ensure they remain competitive. When reviewing fees, consider not only the standard fees but also any additional fees that may apply based on your specific circumstances. By comparing fees and costs across different super funds, you can make an informed decision that aligns with your financial goals and retirement planning.

Once you have compared the fees and costs and chosen your preferred super fund, you can proceed to open an account and transfer your balance. This process is typically straightforward and can often be done online through the website of your new superannuation fund. Remember to consolidate your old accounts to simplify your savings and avoid paying multiple sets of fees.

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Open a new account

When considering a new super fund, it is important to research the investment options available and the level of risk associated with each. Most funds offer a basic level of insurance cover, so it is worth checking that you have the right level of cover and are not paying more than you should.

If you are considering a switch, it is a good idea to compare all fees and costs. Funds charge fees to cover the cost of managing your super and investments, as well as providing other services. The fee and how often it is paid can differ. You may be charged a set fee, a percentage of your account balance, or a combination of both. Lower fees can mean more of your super stays invested for your future.

Before you make the switch, check if your current fund provides any benefits based on who you work for or the industry you are in, for example, discounted insurance cover. You may lose these benefits by switching to a new fund. Also, check that you are not working under an agreement that requires you to be a member of a specific fund.

If you are thinking about rolling over your super to another fund, speak to your super fund and a financial adviser before deciding. You should also check with both super funds about any fees or charges that apply, any effect on your benefits, and any loss of entitlements such as insurance.

If you don't already have an account with the fund you want to switch to, open one before you change superannuation from your old fund. Most super funds have an online join process on their website. It is not uncommon to be asked for personal details, including your Tax File Number (TFN). While it is not compulsory to provide your TFN, if you don't, contributions could be taxed at 47% instead of 15%.

Once you have opened a new account, give your employer your new super details as soon as possible so that they can start paying your super to the right place.

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Inform your employer

Once you've decided to switch super funds, you'll need to let your employer know so they can start paying your super into the correct account. Give your employer your new super account details as soon as possible to ensure your contributions are going to the right place.

If you've chosen to open a new super account with a different provider, you can provide your employer with a copy of their standard form or use their mobile app. For example, if you switch to AustralianSuper, you can provide your employer with a copy of the "Pay my super into AustralianSuper" form or use the AustralianSuper mobile app.

It's important to note that transferring your funds will not change the super fund your employer pays your contributions to. You'll need to speak with your employer about whether you're entitled to choose a different fund and advise them of the new fund account details for future contributions.

Superfund details can change over time due to mergers, closures, or changes to USIs. Therefore, it's a good idea to regularly check your employer's payroll software to ensure they have the correct details for your super fund.

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Transfer your super balance

When transferring your super balance, it's important to be aware of the potential consequences. For example, your current fund may provide benefits such as discounted insurance cover based on your industry or employer. By switching, you could lose these benefits, so it's worth checking if the new fund offers comparable cover. You should also consult the receiving super fund to ensure they will accept a rollover of your super.

To compare funds, you can use a tool like ChantWest Super AppleCheck, which allows you to compare fees, long-term performance, and other factors. When looking at fees, consider whether you'll be paying a set fee, a percentage of your account balance, or a combination of both. Lower fees can leave more of your super invested for your future.

You can also use the ATO service on your myGov account to combine your super accounts into one, avoiding duplicate fees. This service can also help you search for lost super. It's important to note that transferring your super will not change the super fund your employer pays your contributions to, so remember to give your employer your new account details.

If you're unsure about what to do, it's recommended that you seek independent financial advice or contact your super fund.

Frequently asked questions