Before you decide changing your superannuation account it is important to take a number of factors into consideration. Choosing the right superannuation product, is an important decision to make. Unfortunately, it’s not as simple as choosing the fund with the highest performance and then moving everything across to that fund. There’s much to consider to ensure you get the most out of your superannuation account. This article outlines the many pros and cons that are associated with changing your superannuation account.
The importance of choosing a super fund that works for you
There are a number of different super fund products available on the market which is why it’s so important to make an informed decision on which one will suit you best. The account with the biggest balance isn’t always the one that is going to provide you with the greatest investment returns, lowest risk or value across the board. And, it may not be the one best suited to your needs.
Before changing here are some important things to consider;
Fees: What kind of fees does the super account have, as these can vary across funds? Common fees you’ll incur include administration fees, investment fees and switching or exit fees. Make sure you check all these things before you switch.
Beneficiaries: Does the fund provide adequate beneficiary options? Will it ensure your super is being allocated to the right people according to your wishes?
Insurance: What insurance options does the fund offer? Death cover, disability insurance and income protection are key benefits you want to ensure are included. Importantly though check the quality of the insurance, is it even worth having?
Flexible investment options: Find out if there are any limitations on how your money is invested or do you have the control to choose? Many of our preferred superannuation products, for example, have customised options and individual investment options available that allows our clients to ensure they have access to and the ability to diversify their portfolio in line with their chosen level of risk tolerance.
Changing Your Superannuation Account, The importance of Assessing Your Current Super Fund
Before deciding to switch your superannuation product providers, its best to look at what you currently have and compare that to other product options available. Start by investigating and determining what type of account it is. For example, a defined benefit fund differs from an accumulation account (if these are new terms to you, email us so we can speak with you further about the differences). Different account types have varying pro’s and con’s which all need to be considered before acting. Actions taken now may have a flow on effect later down the track especially on your retirement.
Identifying your current fees is a vital consideration to make. Make sure you consider the following points offered by your existing provider:
- Exit fees that you may not have been aware of
- Note your funds’ performance both in the short and long term
- Any beneficiary options that may be in place
- Any insurance policies included as part of your superannuation account – this may need to be replaced if you move.
The pros and cons of changing your super funds
The pros
- Gives you the opportunity to switch to a fund with lower fees and higher returns
- Gives you the opportunity to switch to an ethical fund that aligns with your values
- Reducing your super fees now can have a big impact by the time you reach retirement
- Changing super funds provides a good opportunity to find any lost super you have and consolidate it all into one fund
The cons
- An exit fee may apply when you leave your current fund
- There is a bit of paperwork involved, but this shouldn’t take more than 30 minutes to an hour to complete
- Some employers will only pay your super into their designated fund (although this isn’t very common)
Now that you are aware of what’s involved with changing super funds and what you need to consider, it’s time to compare super funds and get the switching process started.
