Superannuation: Changing funds
Changing funds is an important step. Make sure you don't lose important benefits or suffer extra costs. (And don't forget to tell your new fund your Tax File Number.)
To change funds for an existing balance (including previous employer or personal contributions) ask your old or new fund for a transfer form. You can transfer or roll over your super, with some limited exceptions. Your old fund has 30 days to make the transfer. Make sure that your old fund had your Tax File Number otherwise they may deduct extra tax from your rollover amount if you have received employer contributions.
To change funds for future employer contributions, see Choosing a fund.
Good reasons to change funds
Good reasons to change funds include:
- consolidating super accounts to cut costs and paperwork
- lower-cost or better services that would suit your needs better
- poor investment performance over a 5-year period compared with other like funds with similar asset allocations.
Bad reasons to change funds
Bad reasons to change funds include:
- fear, just because your fund declared a negative return. Stick to judging performance over 5 years or more. See Average returns table.
- jumping on the bandwagon of a top performing fund - chasing returns by moving to last year's top performing fund may not pay off, as that fund may not perform as well next year.
Employer contributions affected?
Check if changing funds will change what your employer contributes. If your employer pays in more than the compulsory 9% to your current fund, changing could reduce your benefits. Sometimes this can happen in less obvious ways, especially with defined benefit funds. For example your employer may favour your current fund by paying in more or offering higher benefits:
- as your length of service increases
- if you make or increase your own contributions
- if your money becomes fully yours (called 'fully vested') only after you stay with the employer for a certain time.
Check the impact on benefits and costs
| Retirement benefits | Some funds, especially defined benefit funds, may limit or reduce what you can transfer, making it better to stay in the fund until you retire. |
| Insurance benefits | Make sure you are not losing important benefits by ceasing your existing cover. It is also important to make sure that you have cover during any transition between funds. Will cover be automatic in your new fund? |
| Costs | Check termination fees from the old fund and contribution fees into the new one. These come out of your account and reduce your benefits. |
FIDO Website: Printed 03/14/2010
