It’s hard to motivate myself to think about my own superannuation.
In our house, right now, the priority list revolves around all those day to day tasks that must be done – food shopping, laundry, paying bills. And a whole heap of tasks that ‘should’ be done but we never quite get there – our out of control garden is a case in point! Something like reviewing my super that is relevant in 26 years’ time has never made the cut! And it has been on the ‘to do list’ for at least 5 years.
My superannuation was so neglected that I had five superannuation funds to my name. Yes, five. Did I just admit that?!
So here is what motivated me in to action.
Over the last year I paid $660 in fees and charges across my super accounts, not to mention the cost of insurance coverage with multiple funds. Now if by reviewing and consolidating my accounts I could save even half of these annual charges, there’s a saving of $330 a year. Doesn’t sounds like much right? But over the next 26 years, a saving of $330 each year would give me an extra $20,791* in retirement (that figure is adjusted for inflation). That’s enough for a bloody good holiday! And my super balance is below average for my age. For most with multiple funds, the gains will be a fair bit more.
Even though I can’t access it now, and I have some fundamental issues with the inequities of our superannuation system, every week 9.5% of my wages is paid to a superannuation account in my name that I was not even remotely managing actively! So, I promised my 65-year-old self a damn good holiday, and I committed to devote just two hours over the week to reviewing my superannuation accounts and coming up with a better strategy than ‘ignore and hope for the best’!
And here’s how it went down… I would be lying if I said this was the slightest bit fun (even for a number crunching geek like me), and it has probably taken me closer to 3 hours over 2 weeks because of a few issues. But with the motivation of a month in Europe when I’m 65, rather than Bonnie Doon Caravan Park, I pushed through the utter boringness that was this task, and can now bask in that wonderful glow that comes from smashing one of those not so fun tasks out of the park.
So, what next? If a trip to the Riviera has motivated you to deal with your messy super, here is my super easy, step by step guide. Let’s get to it!
THE GUIDE
Step 1 – Commit to the task
So you are reading this and thinking ‘yeah, I need to do something about my super’. Not good enough. Commit to the task if you want to sort it out. Commit to the time you will dedicate to the task and make it happen – for most people a few hours at the very most will do it.
Step 2 – Find Your Current Super Funds
You will need to work out what super fund accounts you currently have. This use to be far more time consuming, but with a My Gov account the ATO has made it easier than ever to locate your super. If you don’t have one already, a My Gov account will take you 15 or so minutes to set up. Link the ATO to your My Gov account and you are just a few clicks away from having a complete list of all your super accounts including ones you may have forgotten about, and super that the ATO is holding on your behalf. Print this out – you will need it!
Be warned – there may be missing accounts from the list. When I pulled up my super funds on MyGov, one fund showed a zero balance when I knew it was holding several thousand. The ATO do get it wrong sometimes, and there is quite a delay with the data showing on their system. If in doubt, follow up by calling the ‘missing’ fund, or finding an old statement.
Step 2 – Choose a Super Fund
This step is something that you could dedicate days and days to. But sometimes, over analysis just leads to inaction. Decide how long you want to spend comparing funds, and commit to making a decision after the time is up.
Key factors you might want to consider include:
– Fees: This is super important – my holiday example above shows just how much of a difference it can make! Choose a fund with low fees.
– Investment Options: Make sure the fund you choose offers the investment options you are looking for and level of risk you are comfortable with.
– Insurance Options: Check out if the fund offers the insurance coverage you want and at what cost. (As an aside, many people are not even aware that some super funds allow you to have income protection insurance and life insurance through the fund. It’s a good option for many).
– Performance: Look at performance of the fund over the longer term (5 years plus). Don’t try and ‘pick a winner’ each year.
To keep it simple (and avoid further procrastination), just choose from one of the funds that you already have. I compared my existing funds using the online tools, and picked the best for me (making sure that one of the funds did suit my needs and had adequate insurance coverage). You can always revisit it later.
I quite like Canstar for comparing funds, but there are several different websites to choose from.
Step 3 – Check your insurances
Make sure you check the insurance coverage that you currently have under each super fund. The MyGov site does show you whether each fund has insurance or not, but you will need to do a little further digging. Closing a super fund will end your insurance.
And if you want to start a new fund with insurance, you may not want to close the previous fund until your insurance application is approved and valid.
Step 4 – Start rolling over your existing funds to the chosen one!
Now it’s time to click some buttons!!!! MyGov literally allows you to transfer your balances from one existing fund to another existing fund. Use the “Transfer Super” tab, and follow the prompts. In some instances, the fund may require that signed hardcopy documents are also submitted, but MyGov should generate the forms.
If you are wanting to start a new super fund for the consolidations, you will need to contact the fund you have chosen to complete their necessary process. New funds are usually very helpful with rolling other funds to theirs. They can provide you with the necessary paperwork. Or you can wait until your new fund appears on MyGov, and use the MyGov “Transfer Super” function.
So, there you have it – doesn’t sound to tricky after all right?
Is your Super a little messy?! How long did it take you to sort it out? Perhaps you have some great tips that I’ve missed! I’d love to hear your experiences. Let’s share share share! Xo
** And for the geeks out there, the figure of $20,791 is based on adding $330 per year to your fund, at a growth of 5.3% (which is the historical average return on medium growth super funds, since the Super Guarantee was introduced 24 years ago, of 8.2% less long term inflation of 2.5%).
Leave a Reply