A 2014 report by McCrindle found that by age 75, the average Aussie worker will have 17 different jobs in their working life, with an average tenure of around three and a half years.
Whatever your reason for changing jobs, it would be wise to review your superannuation. In 2017, MLC reported the average Australian expected to need about $1.1 million to retire comfortably, but too many of us are actually sitting below the amount required to reach that point.
With this in mind, it’s important to consider whether your current super fund is right for you, or if another fund may be more suited to your needs. It’s also a great time to look at whether you have multiple super accounts, and if combining them into one account would be appropriate for your situation.
Looking for a new super fund? The table below displays a snapshot of products sorted by annual cost (lowest to highest). These results are based on an average super balance of $20,000.
Annual cost includes administration fees and indirect costs (including the investment fee, performance fee where applicable, and any other indirect management costs). Total cost is calculated based on the average super balance specified, based on the investment option considered within the Canstar Superannuation Star Ratings, 2016.
Research your new company’s super fund
When you join a new company you will likely be asked if you want to provide the details of your current super account for your future contributions to be paid into, or if you would prefer to join the company’s selected default super fund. The Australian Taxation Office (ATO) states employers are required by law to do this for all eligible employees through the provision of a Standard Choice form.
If you don’t notify your new employer of your choice, or if you let them know you’d prefer them to choose for you, the employer can select a default super fund on your behalf.
Before making your decision, you should compare factors including the fees, long-term performance, advice availability and suitable insurance options on offer. It is also important to consider the benefits attached to your current super fund and the alternative fund. For instance, your employer could give you access to a corporate super plan that may have lower fees or a more competitive insurance offering.
Although consolidation is generally encouraged as it can reduce the fees charged and amount of paperwork to contend with, it is not right for everyone. For instance, rolling your super from one provider to another usually sees any insurance you had through your previous super fund cancelled, along with any other benefits you could have had access to, such as loyalty discounts.
And when insurance is of particular importance, some people steer away from consolidation after finding they aren’t eligible for the same, or indeed any, level of insurance cover with the new fund they are considering. It’s important to be aware that when consolidating, exit fees may apply, and they do vary across funds. Also note that not all super funds allow you to roll over your balance, so consolidation is not always an option.
How to roll over your super
Rolling over your super balance from one account to another is typically a simple process, as long as you have your member number and tax file number on hand. Thanks to the age of the internet, the majority of providers make it easy to roll over your super when you sign up. This can be as simple as entering the details of your current fund on the provider’s rollover tool.
It may take a few business days for your balance to transfer over.
How to combine lost super
If you’ve just realised you’ve never rolled over your super when joining a new fund, you’re not alone. Data from the ATO shows that as of June 2017, 40% of Australians have more than one super account. In fact, 1% of us (about 15,000 people) have more than six!
|Number of accounts||Total individuals||Male||Female|
|6 or more accounts||1%||62%||38%|
|Source: Australian Taxation Office. Data accurate as of 30th of June 2017.|
If you decide to consolidate your super, it is usually quite a simple process. Many providers have a tool on their site that helps you complete this task, but myGov also has a tool that aims to track down your lost super for you. All you need to do is create an account, enter your Tax File Number and add some security questions and it will conduct a search for you. If you have the member number of the fund you want to combine it all into, then it may also be able to complete that process for you.
If you want a demonstration, see this video from the ATO:
Changing job types
If you’re moving into a different class of work – for instance, becoming a casual worker or going from full-time to contract-based work – then you should be aware that there are slightly different rules that can apply for each.
Superannuation For Casual Employees
For casual workers, the normal 9.5% rule applies if:
- You’re over the age of 18 and earn more than $450 (before tax) in a single calendar month
- You’re under 18 and work for more than 30 hours a week, while still earning $450+
There have been some cases where employers have tried to avoid paying their casuals super, so it’s important to know your rights. You can read more about this below.
Superannuation for contractors
Superannuation for contractors is a bit murkier, although they definitely are still entitled to it in some cases. A contractor – someone who is paid for an achieved result and provides most or all of the assets required – is entitled to the usual 9.5% from the people who have made use of their services. So if you hire a contractor, you must make super contributions to their account if you pay them:
- For their personal labour and skills
- To perform the contracted work personally and they don’t delegate the work to someone else
- Under a verbal or written contract where more than half of the dollar value of said contract is for their labour
The article below provides a more detailed explanation, including on when contractors aren’t entitled to super.
How to get the most out of your super
When comparing super funds, two key things to look at are costs and long-term performance.
Fees can be a silent killer on superannuation balances, particularly when not balanced out with adequate investment performance. According to a 2017 report commissioned by Industry Super Australia, Australians paid more than $31 billion in total superannuation fees in 2016 alone. There are also other costs to consider, such as group insurance premiums which accounted for a hefty $8.4 billion (27%) of the industry’s total revenue.
These insurance premiums typically buy you a combination of life insurance, total and permanent disablement (TPD) cover, and/or income protection, so it is important to weigh up if this is a benefit of value to you, and if you have adequate cover to provide you with peace of mind. For an additional cost, your super fund may offer additional insurance cover when you let them know a few details, like your occupation and a few things about your lifestyle and medical history.
If you have multiple super funds you may already have some cover, so be sure to check you’re not collecting more insurance than you need.
Performance is also important to a fund’s strength. While past performance is never a guarantee of future performance, a super fund that has a strong, consistent track record of achieving above-average returns is usually a good sign. An extra 1% in annual returns every year could result in a difference of more than $100,000 in your account by the time you’re ready to retire!
To find a fund that has a history of strong performance, why not start with our list of top performing super funds? You can also compare the fees and features of various super funds with Canstar.