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 1 month to make the transfer.
To change funds for future employer contributions, see Choosing a fund.
Good reasons to change funds include:
- changing jobs where your current fund is not available with your new employer
- consolidating super accounts to cut costs and paperwork
- lower-cost or better services that would suit you more
- poor investment performance over a 5-year period compared with similar 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.
- jumping on the bandwagon of a top performing fund. This can rebound on you if, as quite often happens, that fund performs poorly 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 stay covered. Will cover be automatic? How long does your old fund cover you, and when does cover start 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 09/06/2008
