You will be pleased to know that changing your super fund is a relatively easy process, regardless of your reason for changing and even better it can be done online. This article will share four steps involved in changing super funds and what important information you need to consider before switching.
Steps in changing your super fund
There are four steps to changing your super fund:
- Compare your options and choose a new superannuation fund
- Join your new super fund by completing the online membership application form
- Move your super from your old fund into your new fund (your fund will do this for you)
- Update your super fund details with your employer
Let’s get into more detail for exactly what’s involved with each step.
Step 1: Choose a new super fund
The first step is choosing your new super fund. We’re about to go through what to consider when choosing a super fund for yourself.
When comparing your options, it’s a good idea to take into consideration the following factors:
Like any other financial service or product, you want to avoid paying higher fees than you need to for your super. Fees are deducted before the fund passes on any investment returns to you, so if you’re paying high fees, these will quickly eat into your returns.
There is no blanket figure to look for, but as a general rule, annual fees of 1% or lower (as a total of your account balance) are considered to be low fees. For example, if you had $50,000 in your account, make sure you’re paying annual fees of around $500 or less. You can find more information on how to compare fees in our superannuation fees guide.
It is highly advisable that you look for a fund that has a long history of strong investment returns. By ‘long history’, we don’t mean looking at the return for the past year alone. Instead, this means looking at the average return over a 5 to 10-year period and comparing this against similar funds (it’s not a fair comparison to look at a balanced fund against a high growth fund, for example). Always remember that superannuation is a long-term game.
It is also important to keep in mind that past performance alone won’t give you a reliable indication if the fund will continue to perform well.
A superannuation fund is like a giant investment portfolio. Each fund will invest your money in a different way depending on what the fund managers believe will deliver the best returns. The majority of super funds invest in a mix of asset classes including local and international shares, cash, property, and fixed income.
However, the percentage of your balance invested in each of these asset classes is what differs from fund to fund. For example, a high growth investment option could invest 80 percent of your super balance in global shares (because shares are considered to be the highest risk asset class). In comparison, a balanced investment option might invest just 40% of your balance in global shares, in order to reduce the risk.
Some super funds also offer ethical super fund options. As an example, these might avoid investing in companies that manufacture coal, tobacco and weapons and instead invest in renewable energy companies.
When comparing super funds, it is important to look at the different investment strategies offered by each fund to make sure they’ve got one that aligns with your investment strategy, the level of risk you’re comfortable taking on and your personal values.
Step 2: Join the new super fund
Once you have chosen the fund that you’d like to switch to, it’s time to join the fund as a new member. To do this, download the new membership form from the fund’s website (if you are unable to find it, it’s s usually located in the PDS). You can print this out if you find it easier to fill it in this way.
The form will ask you to provide the following details, so make sure you have these handy:
- Your personal details including your full name, residential address, contact information and Tax File Number.
- Your employer’s information including the business name, address and ABN.
- The insurance cover you’d like to include. Most funds will include automatic default death and TPD cover, but you can choose to add income protection cover, or you can opt out of all cover if you don’t think you’ll need it.
- The details of your nominated beneficiaries (this is who your super will go to in the event of your death).
Furthermore, the new membership form will ask you if you’d like to roll over any existing super from another fund into your new fund.
Step 3: Roll over the super from your old fund to your new fund
It is highly beneficial to ensure that you only have the one super fund open in your name. If you have multiple funds, you will be paying multiple sets of fees. The good news is, your new super fund will do all the hard work for you.
Once you’ve completed the new membership form, there will be another form asking if you have any super that you want to roll over. If you do want to combine it, you’ll be asked to provide the following details:
- Your existing fund’s name and contact number
- The fund’s ABN and USI numbers (you’ll find these on your fund’s website or on your last account statement)
- Your membership number and/or account number
The new membership form will have the details of where to send the completed form. Once you have submitted this, your new super fund will contact your old fund and organise for your balance to be transferred over on your behalf. This will be actioned pretty quickly, usually within three business days.
Step 4: Give your employer the details of your new super fund
The final step is to inform your employer that you’re changing your super fund, so they can start paying your superannuation guarantee payments into your new fund. You will find another form for this on your new fund’s website. It’ll be called something along the lines of “Employee super choice form” or “Pay my super into XYZ Fund”.
The form will be pre-filled with all the details of the fund that your employer needs. The only thing you will be required to do is to add your name and membership number. Give this form to your employer and they will look after the rest.