One of the biggest revelations of the banking Royal Commission has been just how much so many of us are being gouged in super fees. Madeleine Morris looks at how to save money by consolidating super funds.
While Morris understands that this is not efficient and she is likely to be paying more in fees as a result, getting up at 3am to present breakfast TV while being mother to two young children does not leave much time to actively manage her finances. And Morris is not alone.
A recent Productivity Commission report found that about one third of all super, approximately 10 million accounts, have been opened unintentionally, are unwanted or unneeded.
The beauty of recent developments is it’s easier to keep track of your retirement savings, ensuring that you are building a meaningful nest egg for the future. Here are some initial actions to focus on if you are in a similar position to Madeline – too busy to fill in lots of forms but keen to make the most of your money.
The place to start is knowing what super you have. Many of us feel so disconnected to our super that we don’t even bother opening our regular statements. Sometimes super accounts have been established for us that we didn’t even know about as a result of short-term or one-off jobs.
If you have linked your MyGov account to the Tax Office, you will be able to see all your superannuation accounts in one place and larger employers report all superannuation payments so that they are visible on the site. With information consolidated on MyGov, you should no longer need to perform separate searches or call various super funds to find out what super you have. You might be surprised that there is more money than you expected once your benefits are aggregated in one place.
Once you know what you have, follow the helpful links to the MoneySmart website, with great resources to assess which super fund is the best fit for your needs. The comparison tools allow you to easily assess the long-term impact of fees and investment choices within each of your super accounts. It also gives an insight into other features and benefits, such as insurance and member advice services. Importantly, just because your employer currently contributes to a fund does not necessarily mean that you need to stick with it. Most Australians have the right to choose the super fund to which their employer contributions are paid, so if your employer’s default fund does not measure up, it might be time to make a change.
The real beauty of the MyGov site is the ability to consolidate your funds within the website itself with the click of a button. There are helpful warnings to ensure that you don’t inadvertently cancel valuable insurance by consolidating and generally the process can be completed entirely on the MyGov site itself, although some follow-up paperwork may be required by some funds. It is a huge improvement to the previous time consuming, paper heavy method.
Being able to see all your super in one place and ability to confidently consolidate into one high-performing fund, might just seem like administrative efficiency. However, even more powerful is the sense of control and ownership which comes from feeling connected to your retirement savings. Saving on fees and eliminating unneeded complexity might even be the first step towards making additional voluntary super contributions to harness the power of compounding which can be the real game changer in creating financial security in retirement.
Article by Catherine Robson. Published by The Sydney Morning Herald, September 13, 2018.