Making Super Super: Navigating the Superannuation Process
Is there a more exciting word in the English language?
While many of us don’t find superannuation exciting, it is an essential part of working life and it pays to spend a few minutes thinking about it. For many of us, our superannuation will be our largest asset – particularly with Sydney property prices meaning that we may never own a home, which traditionally has been one’s largest asset.
So, what do I need to do?
You’ve got your job offer – Congratulations! Celebrate!
Then you get your employment forms. So. Many. Forms. Tax file number forms, bank account forms, superannuation forms… what do they all mean?
Take a moment to look at your superannuation form. It will probably ask you to complete details of your preferred superannuation fund – or say they will put you into their default fund if you do not have a preferred fund. It is often easier to go with the default fund, but spend a few minutes checking out this fund. Their website is a good place to start. What are the fees? What investment options are there? How have they performed? What are the insurance options? There is a LOT of information out there, and it is often hard to wade through it, or determine what’s important and what’s not.
There are some great ratings agencies that can assist you here, with things like lists of the 10 lowest cost or best performing funds. Be careful about selecting a fund based purely on these factors though, as investment performance can vary widely from year to year, and the cheapest fund isn’t always the best!
You may also feel very strongly about certain things, such as ethical investing. Most funds now have some kind of ethical investment option, and may be described as an SRI (Socially Responsible Investment) or an Ethical Investment option. Choice has a good article outlining what this may mean.
There is a good chance that your employer’s default fund is a good one – and it may be easier to simply stick with them.
So what now?
The usual course of events is that your new employer will send your first superannuation payment to the super fund (either the default fund or the one you have chosen), and they will open an account for you. No need to provide ID! When you get a notification from the fund that your account has been opened, you can get started on consolidating the other little bits of superannuation from all those casual or part-time jobs you had at uni.
It may seem like a nuisance, and they may be very small amounts of money, but it’s your money and it all counts! And it may add up to something substantial.
When I started working in superannuation over 10 years ago, my mum said she had no super. She had worked lots of casual and part-time jobs over the years, and had assumed that all her small accounts had been eaten up in fees. But she did a SuperSeeker search through the ATO and found 7 different super accounts, which together added up to $2,000. So she rolled them all into one and started adding to it and now she’s practically Beyonce.
Your new superannuation fund may do this search for you, or you can use the ATO website – which is surprisingly easy if you’re registered with MyGov. SuperGuide explains some options.
Watch out for the small print
Be aware that you will be unable to roll in small accounts if your employer is still contributing to it, i.e. if you are still working in that job, or have only recently left it. You may need to keep two or more accounts open, at least for the time being.
Also be aware that by closing a superannuation account, you will be forfeiting any insurance coverage you have with that fund. You may find that you have adequate insurance with your current fund, or perhaps outside of superannuation, or you may decide that maintaining the insurance cover is worth paying for. This is entirely up to you, and will be an individual decision.
You may also be liable for an exit fee when you close the account. With most funds this will be a small amount, particularly if the account balance is small, or there may even be no fee. Be sure to check it out before signing anything.
Once you have your superannuation sorted and in one place, be sure to keep your fund updated with your address and other contact details, and check your statements when they arrive. To check that your employer is paying the correct amount, visit the MoneySmart website.
Now you can get back to all those other forms!
Note: This post is intended only as a guide and does not constitute financial advice. Before taking any action based on the information provided, please seek advice from a licensed financial advisor to determine the best approach for your personal circumstances.
Featured image courtesy of Unsplash.
By Deanna Rowe
Deanna Rowe is a Registered Nurse and proud UTS Alumni. She completed the Bachelor of Nursing after more than 10 years in superannuation education and training.