Should I consolidate my super?
There are many reasons to consolidate your super into a single fund but fees and the convenience of monitoring a single fund are dominant motivations.
Multiple funds means duplicated fees. Typical fees are;
- Member fees – these are administration fees that will be duplicated in multiple funds.
- Investment fees (MER) – these are the fees charged to invest your funds usually a percentage of the balance. This is often the biggest cost.
- Contribution fees – these are the fees charged to collect and invest fees. They would be duplicated in multiple funds.
- Adviser fees – these are the fees paid to an adviser for personal advice. They would be duplicated in multiple funds.
- Insurance premiums – these are the premiums paid for your insurance cover in the fund.
- Other fees – there could be other fees such as establishment fees, withdrawal fees, exit fees, performance fees, switching fees and more.
Over 30 years, a 1% reduction in fees results in a 20% increase in benefit.
Easier to monitor your super
Multiple funds means multiple member statements detailing contributions, performance and fees. The member then has to collate all this information to get an accurate picture.
Consolidating all your funds into a single fund means there is only one member statement which will give an accurate picture of your superannuation arrangements.
Overall spring clean
Consolidation is an opportunity to give your super a “spring clean” and address the other importants elements of your super.
- Insurance. Which fund offers the best cover at the best premium? Be sure you will get cover in the new fund before switching.
- Returns. Past performance is no guarantee of future performance but do you expect better performance in any fund?
- Asset mix. The new fund must have an asset mix that matches your risk profile.
- Costs. Which fund has the better cost structure.
- Service. Do any of the funds have a service benefit you value like on-line switching?
If none of your funds have the cost/benefits you are looking for you can rollover your funds into a new one.