Tips & Tricks

No matter what your reason is for changing super funds, it’s easy to do so. You can do it online. These are the steps to change super funds, and what you should consider before making the changes in super funds.

Steps to change super funds

You can change your superannuation funds in four steps:

  1. Compare all your options before you choose a super fund
  2. Register online to join your super fund
  3. Transfer your super from the old fund to your new fund. Your fund will handle this for you.
  4. Your employer should update your super fund information

Let’s go into detail about each step.

Step 1: Select a super fund

First, you need to choose your super fund. You can either read our top super fund picks or let us know if you think one of these might be right for you.

It’s a smart idea to compare your options and consider these factors:

The fees

You want to avoid paying more fees for your super than you have to, just like any other financial product. You will be charged fees before the fund transfers any investment returns. If you are paying high fees, this can quickly impact your returns.

Although there is no one right number to aim for, a rule of thumb is that annual fees not exceeding 1% (as a percentage of your account balance) should be considered low fees. If you have $50,000 in your account, you should ensure that you are paying annual fees around $500. Our superannuation fee guide provides more information about how to compare fees.

Performance in the past

You should look for a fund with a strong track record of high investment returns. We don’t just mean the return over the last year. This means that you compare the average return over 5-10 years with similar funds. It’s not fair to compare a balanced fund to a high-growth fund. Super is a long-term game.

Keep in mind, however, that past performance is not a reliable indicator of future performance.

Investment options

Super funds can be thought of as giant investment portfolios. Each fund will invest money in a different manner depending on which fund managers think will yield the highest returns. Super funds tend to invest in a mixture of asset classes, including property, fixed income, and shares.

Fund to fund, however, will vary in the proportion of your balance that you invest in each asset class. A high growth investment option, for example, might invest 80% in global shares. Shares are the most risky asset class. To reduce risk, a balanced investment option may invest only 40% of your super balance in global shares.

Many super funds offer super fund options. These super funds might, for example, avoid investing in weapons, coal and tobacco companies and instead invest in renewable energy companies.

Compare super funds by looking at their investment strategies. Make sure you are comparing the best ones to ensure you find one that suits your investment strategy, personal values, and the risk level you are comfortable taking.

Step 2: Sign up for the super fund

Once you have chosen the fund you wish to switch to, you can join the fund as an existing member. Download the new membership form from fund’s website. If you don’t see it, it is usually included in your PDS. If you find it easier to complete, you can print it.

These details will be required by the form. Make sure to have them handy.

  • Personal details such as your name, address, phone number, and Tax File Number.
  • Information about your employer, including business name, address, and ABN.
  • You can choose the insurance coverage you want. The majority of funds include TPD and automatic default death coverage. However, you can add income protection or opt out if you don’t feel you need it.
  • Your details as to your beneficiaries (this is where your super will go in the event you die).

You will be asked if you would like to transfer any supers from another fund into the new membership form. We are now at step 3.

Step 3: Transfer the super from your existing fund to your new one

It is really important to only have one super fund in your name. Multiple funds will result in multiple fees. Your new super fund will take care of all the work.

After you’ve filled out the new membership form, another form will ask if you have any super you wish to rollover. If you want to combine it, please provide the following information:

  • Name and contact number of your existing fund
  • You will find the fund’s ABN number and USI number on the fund’s website.
  • Your account number and/or membership number

You will find the address where you can send the completed membership form on the new membership form. After you have submitted the form, your super fund will contact your previous fund to arrange for your balance transfer. This process will usually take less than three business days.

Before you fill out the new membership application, make sure you check to see if there are any super funds in your name. You might have an additional super fund or two if you have worked multiple jobs. It’s easy to check this: log in to your myGov online account and click on “Super”. You will see a list with all the funds that you have. You can choose to keep one or more of these funds, instead of opening another one. Then you can roll your existing super account into the new one via myGov portal.

Step 4: Tell your employer about your super fund.

Last, tell your employer about your change in super funds so they can begin paying your superannuation guarantees into your new fund. This form will be available on the website of your new fund. It will be called “Employee Super Choice Form” or “Pay My Super into XYZ Fund”.

Your employer will already have all of the information they need on the form. Only you will need to add your name, membership number and address. This form can be given to your employer. They’ll handle the rest.

Can I consolidate super accounts into one fund?

Yes, you can. You can roll over super funds from more than one fund into one new fund by completing separate forms. This is the same process as in step 3. To arrange the transfer of funds, your new super fund will contact each super fund.

How much will it cost to convert super funds?

Some funds charge an exit fee if you close your account or leave the fund. The PDS will list the exit fee on their website. Usually, the exit fee is between $40 and $60. For opening an account in a super fund, there are no joining fees.

Do I have to pay capital gains taxes when switching funds

Not initially. Capital gains tax is charged when you sell your investment and take cash. This can be a profit or loss. Superannuation is different. If you transfer your super to another fund, the money remains within the super system. Any tax elements applicable will be simply rolled over to another fund and will still apply when you withdraw the money.

If you took the money out of your super fund and transferred it to your bank account. Capital gains tax would apply if you do this. Withdrawing your super is not an option unless you have reached your preservation year  and met a condition for release. Instead, the money will remain within the super system and can be transferred to other funds.

The cost of not changing your funds

A $50 exit fee for switching funds is a small amount compared to the cost to stay with a low-performing, high-fee fund. Although the fee difference may not seem significant over a year, it adds up over time. Switching to a fund with 1% lower fees could allow you to retire with thousands, or even hundreds of thousands, more in your super.

Are there any requirements to update my super fund when I change jobs?

You don’t have to modify your super fund if your job is terminated. Simply tell your new employer the details of your super fund and they will pay your super into your existing account when you start your new job. You might be able to open a new super fund if you don’t inform your new employer about your super funds.

You won’t lose super if you quit your job. No matter where you work, your super is yours and will remain in your name.

What are the pros and cons to changing super funds?

Here are some pros and cons to changing super funds.

The pros

  • This allows you to switch to a fund that has lower fees and better returns
  • This gives you the chance to switch to an ethics fund that aligns to your values
  • You can make a huge difference by reducing your super fees before you retire.
  • The best way to consolidate all your super and find any super that has been lost is by changing super funds

The cons

  • You may be charged an exit fee if you decide to leave your current fund.
  • Although there is some paperwork involved, it shouldn’t take longer than 30 to 1 hour to complete.
  • Some employers won’t pay you super, but this is not very common.

It’s done! Now what?

You now have a better understanding of super fund changes and the factors you should consider. It’s time to start comparing super funds and getting the switch process underway.

Also read: Income Protection Redundancy

Leave a Reply

Your email address will not be published. Required fields are marked *