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Whatever your reason for switching super funds is, you'll be pleased to know that changing super funds is an easy process (we promise!) that can be done completely online. Here are the four steps involved in changing super funds and what you need to consider before switching.
Steps to changing super funds
There are four steps to changing your superannuation fund:
- Compare your options and choose a new super fund
- Join your new super fund by completing the online membership application form
- Move your super from your old fund into your new fund (your fund will do this for you)
- Update your super fund details with your employer
Let's get into more detail for exactly what's involved with each step.
Step 1: Choose a new super fund
The first step is choosing your new super fund. We're about to go through what to consider when choosing a fund yourself, or you can take a look at our best super fund picks to see if one of these is right for you.
When comparing your options, it's a good idea to consider the following factors:
Like any other financial product or service, you want to avoid paying higher fees than you need to for your super. Fees are deducted before the fund passes on any investment returns to you, so if you're paying high fees, these will quickly eat into your returns.
There's no blanket figure to look for, but as a general rule, annual fees of 1% or lower (as a total of your account balance) are considered to be low fees. For example if you had $50,000 in your account, make sure you're paying annual fees of around $500 or less. You can find more information on how to compare fees in our superannuation fees guide.
Look for a fund that has a long history of strong investment returns. And by 'long history', we don't mean looking at the return for the past year alone. Instead, this means looking at the average return over a 5 to 10 year period and comparing this against similar funds (it's not a fair comparison to look at a balanced fund against a high growth fund, for example). Always keep in mind that super is a long term game and any fluctuations of performance will even out over the long term.
Just keep in mind that past performance alone isn't a reliable indicator that the fund will continue to perform well.
Super funds are like giant investment portfolios. Each fund will invest your money in a different way depending on what the fund managers believe will deliver the best returns. The majority of super funds invest in a mix of asset classes including local and international shares, property, cash and fixed income.
However, the percentage of your balance invested in each of these asset classes is what differs from fund to fund. For example, a high growth investment option might invest 80% of your super balance in global shares (because shares are considered to be the highest risk asset class). In comparison, a balanced investment option might invest just 40% of your balance in global shares, in order to reduce the risk.
Some super funds also offer ethical super fund options. As an example, these might avoid investing in companies that manufacture coal, tobacco and weapons and instead invest in renewable energy companies.
When comparing super funds, take a look at the different investment strategies offered by each fund to make sure they've got one that aligns with your investment strategy, the level of risk you're comfortable taking on and you personal values. You can learn more about this in our guide to superannuation investment options.
Ready to choose a new super fund?
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*Past performance and fee data is for the period ending December 2021.
Step 2: Join the new super fund
When you've chosen the fund that you'd like to switch to, it's time to join the fund as a new member. To do this, download the new membership form from the fund's website (if you can't find it, it's s usually included in the PDS). You can print this out if you find it easier to fill it in this way.
The form will ask you to provide the following details, so make sure you have these handy:
- Your personal details including your full name, residential address, contact information and Tax File Number.
- Your employer's information including the business name, address and ABN.
- The insurance cover you'd like to include. Most funds will include automatic default death and TPD cover, but you can choose to add income protection cover, or you can opt out of all cover if you don't think you'll need it.
- The details of your nominated beneficiaries (this is who your super will go to in the event of your death).
The new membership form will also ask you if you'd like to roll over any existing super from another fund into your new fund. This brings us to step three.
AustralianSuper - Pre-mixed, Balanced option
AustralianSuper is an award-winning industry super fund and the largest super fund in Australia. The Balanced fund invests in a mix of different assets like shares, property and cash.
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Step 3: Roll over the super from your old fund to your new fund
It's really beneficial to make sure you only have the one super fund open in your name. If you have multiple funds, you'll be paying multiple sets of fees. The good news is, your new super fund will do all the hard work for you.
Once you've completed the new membership form, there will be another form asking if you have any super that you want to roll over. If you do want to combine it, you'll be asked to provide the following details:
- Your existing fund's name and contact number
- The fund's ABN and USI numbers (you'll find these on your fund's website or on your last account statement)
- Your membership number and/or account number
The new membership form will have the details of where to send the completed form. Once you've submitted this, your new super fund will contact your old fund and organise for your balance to be transferred over on your behalf. This will be actioned pretty quickly, usually within three business days.
🔥 Quick tip when rolling over your super
Alison Banney, banking and superannuation editor
"Before you complete the new membership form, check if you've got any additional super funds open in your name that you might have forgotten about. If you've had multiple jobs, you could have an extra super fund (or two) open in your name without realising it. This is simple to check: just log into your myGov account online and click on the "Super" tab. This will give you a list of funds in your name. You can even choose to keep one of these funds instead of opening a new one, and roll your other super account over into that one all via the myGov portal."
Step 4: Give your employer the details of your new super fund
The last step is to tell your employer that you've changed super funds, so they can start paying your superannuation guarantee payments into your new fund. You'll find another form for this on your new fund's website. It'll be called something along the lines of "Employee super choice form" or "Pay my super into XYZ Fund".
The form will be pre-filled with all the details of the fund that your employer needs. The only thing you'll need to do is add your name and membership number. Give this form to your employer and they'll take care of the rest.
If your looking to be kept up to date regarding super, then have a read of our changes to Australian superannuation content
Can I consolidate multiple super accounts into my new fund?
Yes, you can. If you've got more than one super fund and you want to roll them all over into your new fund, you need to complete separate forms for each one (this is the process we outlined in step 3). Your new super fund will contact each of your current super funds to arrange for the money to be transferred.
What will it cost to change super funds?
Some funds do charge an exit fee when you leave the fund and close your account. This will be listed in their PDS on their website. If there is an exit fee, it's usually around $40 to $60. There are no joining fees for opening an account with a new super fund.
Will I need to pay capital gains tax when switching funds?
No, not initially. Capital gains tax is paid when you sell an investment and take the cash, making a profit or a loss. In the case of superannuation, when you roll over your super into another fund, the money stays within the super system. So any tax elements that apply will simply be rolled over to the new fund, and will apply when you eventually withdraw the money.
This wouldn't be the case if you withdrew the money from your super fund into your bank account and then moved it from your bank account to the new fund. If you did this, then you would be required to pay capital gains tax. However, unless you've reached your preservation age (find out what your preservation age is) or met a condition of release, withdrawing your super isn't an option. Instead, the money will stay within the super system and be transferred from one fund to another.
The cost of not changing funds
Paying a $50 exit fee to switch funds is extremely minor when compared to the cost of sticking with a high-fee, poor performing fund. The difference in fees might not seem like much over one year, but when compounded over 20, 30 or even 40 years, the difference really adds up. By switching to a fund that charges 1% lower fees, you could potentially retire with thousands (or even hundreds of thousands) more in your super.
Do I need to change super fund when changing jobs?
No, you don't need to change your super fund if you leave your job. When you start your new job, simply give your new employer your super fund details and they'll pay your super into your existing fund. If you don't tell your new job about your super fund, you might have a new one opened for you in your name.
Don't worry, you won't lose your super when you leave your job. Your super is yours, and will always be in your name, regardless of where you're working.
The pros and cons of changing super funds
As a summary of what we've discussed in this guide, here are the pros and cons of changing super funds:
- Gives you the opportunity to switch to a fund with lower fees and higher returns
- Gives you the opportunity to switch to an ethical fund that aligns with your values
- Reducing your super fees now can have a big impact by the time you reach retirement
- Changing super funds provides a good opportunity to find any lost super you have and consolidate it all into one fund
- An exit fee may apply when you leave your current fund
- There is a bit of paperwork involved, but this shouldn't take more than 30 minutes to an hour to complete
- Some employers will only pay your super into their designated fund (although this isn't very common)
Got it! What now?
Now that you know what's involved with changing super funds and what you need to consider, it's time to compare super funds and get the switching process started.
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