Changing jobs is simply just a part of one’s life. Often making the transition between jobs is the start of a new beginning in your career. Regardless of the circumstances behind the change, we enter a new job hoping that it will go well.
Changing jobs also means there will be consequences for your superannuation. Your existing super will typically remain in its current account, unless you specifically direct your fund to roll over your balance to another superannuation provider. Your new employer will be responsible for making future contributions towards your retirement, but they may have their own default super fund. With this in mind, what happens to your super when you change jobs?
It might seem like a daunting proposition to be thinking about how to manage your super while starting a new job, but it’s actually a relatively straightforward process! Let’s take a closer look at your options.
One of the simplest ways to manage your super when changing jobs is to retain your existing super account and ask your new employer to make contributions into that account.
To do this, you’ll need to advise your employer to make payments into the said account. You’ll need to provide the details of your existing account so that your new employer can make arrangements. This will be done through the paperwork that you complete when you begin your new job, but if in doubt you can contact your existing super fund and have them guide you through the process.
Should you not complete the necessary paperwork when you first join the company, you can still ask your employer to pay into your existing fund at a later date. In the meantime, however, your new employer will begin paying into a new account set up through their nominated superannuation fund.
In some very limited circumstances, you could be restricted from nominating to use your existing super fund. This is typically limited to certain industries where there are provisions dictating the super fund that your employer is required to pay into. As mentioned, however, this is the exception rather than the norm.
While retaining your existing super fund and having your new employer direct payments into the fund is an easy approach, it may not always be in your best interests. Your existing super fund could be underperforming, have high fees or fall short of your insurance needs. You should do your research by comparing super funds, something Lost Your Super can help you with.
The other option you have is to open a new super account through your new employer. They will have a nominated super fund, which you can choose to join if you’d like your employer to pay into that fund. There may even be certain benefits that are worth considering as part of a corporate super plan.
Again, you should be doing your due diligence to look at what sort of benefits and shortfalls might be associated with this fund, including insurance cover, as well as how the fund has been performing and what fees members are charged.
Opening a new super account may also seem like a simple and easy option, and at first, it is. However, if you are opening a new super fund while retaining your existing super fund, it can lead to other issues.
The most prominent issue is the fact that you are likely to be paying two sets of membership and administration fees. In other words, you are being charged twice for something that is unnecessary, and your super balance won’t grow at the same rate as fees begin to eat into your returns. Don’t fret, however, help is just around the corner.
If you haven’t heard of it Lost Your Super, is a company that helps a variety of clients who choose to manage the issue of multiple super accounts. Whether you open a super account with your new employer, or have Lost your Super do the research and help you find the most appropriate super fund to meet your needs, they can help you redirect existing super into one account. This option won’t always be available, but where it is, it is worth considering.
Consolidating your super refers to the process of rolling over existing super from any other accounts into one account. By consolidating your super, you can potentially reduce your fees, not to mention, make it easier to manage and monitor the growth of your super balance.
You should be mindful, however, that rolling over super from one account to another could see benefits of your current fund, including insurance cover, cease. That’s why guidance from Lost Your Super could prove invaluable to help you make the decision that is in your best interests for the long-run.
They can also help you search for any historical super accounts you may have opened a long time ago and forgotten. You’d be surprised how much you might have hidden away in lost super!
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Mintwell Capital Pty Ltd (ABN 13 616 609 548) is an authorised representative, AR 1254638, of AFSL Holdings Australia Pty Ltd (ABN 75 165 392 889) AFSL 460940.