Spring cleaning and consolidating your super

Most of us have had more than one job and if you’re like I was when I was younger I just never got round to doing the paperwork properly. This means you end up with small bits of superannuation in various superannuation fund accounts. They all generally accrue fees of some kind or other and the features and benefits of each account vary. Plus, if you’ve ended up in the employer’s default fund, the market sector the funds are invested in is probably relatively conservative and may or may not reflect your risk profile.

Spring Clean your Superannuation

Today’s spring cleaning suggestion is that you get all those old superannuation statements and think about consolidating them into one account with an appropriate investment option to suit your risk profile. You need to lay all the super statements out on the desk and do a bit of analysis first to make sure you make the right decision and don’t mistakenly cancel benefits you can’t get back. You may also need to read the fund PDS (product disclosure statement).

The following list is not exhaustive but we think you should consider the following in making the decision about which fund to use:

Cost and fee structure – what do you pay for verses what do you get? There is a huge amount of choice out there but don’t let cost be the only variable you make the decision on. For example, industry funds are often very cheap and some of them are very good. However, the reason some of them are cheap is because they don’t have systems in place which allow them to value their investment portfolios every day. This means that you may not be sure of getting your fair share of the pie when you buy in and out of the fund. In addition some industry funds also aren’t that transparent regarding what your money will actually get invested in when it gets to the fund.

Investment options – you don’t need 10,000 of them but make sure there are enough suitable options within the fund to achieve your objectives, fit in with your risk profile and the fund manager style you are seeking.

Benefits – lots of funds have extra bells and whistles which you may or may not need. Make sure you get what you need and aren’t paying for anything you don’t.

Insurance – this is the big one. You might find you actually have a level of death or trauma insurance cover attached to your existing super account. If you roll your money out of the fund you will lose the cover and might not be able to source cover elsewhere due to pre-existing health conditions or for the same price. Also don’t forget to check and understand the definitions, wait/benefit periods attached to the policy – you may not be able to get the same cover with another fund.

Business or self employed – you need to do the paperwork with the fund regarding claiming a tax deduction for contributions made and get the fund’s acknowledgement before you roll your money out.

Past investment performance – while past performance provides no guarantee of future performance, make sure you understand the credentials of the fund manager(s) you choose and the investment style they use. Where possible try to pick fund managers who use investment styles which are complementary.

Switching between funds – How long will it take you to make a switch between funds? Is time out of the market likely to have a big impact on your super savings?

Is your super accounted for? To double check jump on ASIC’s unclaimed money register (www.asic.gov.au) and search unclaimed monies or the ATO’s super seeker application (ww.ato.gov.au) and search superseeker – you’ll need your name, date of birth and Tax File Number.

So there you have it. Your next rainy day activity – sorted.

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