Superannuation Consolidation: How to Avoid Fees & Maximise Your Retirement Savings.

The Case for Consolidation

As of 2021, 4.4 million Australians had multiple superannuation accounts, leading to millions in unnecessary fees each year. The Australian Taxation Office (ATO) estimates that consolidating super accounts could save individuals an average of $500 per year in fees—adding up to over $15,000 in extra retirement savings over 30 years.

Beyond the cost savings, consolidation also simplifies managing your retirement funds, making it easier to track your super’s performance and ensure your investments align with your long-term goals.

Potential Risks and Considerations

Before consolidating, it’s crucial to weigh the potential downsides to avoid costly mistakes:

• Insurance Coverage Loss 📉
  Many super accounts include automatic life, TPD, and income protection insurance. When you consolidate, you might lose valuable coverage. Check your policies before rolling over your funds.

• Exit Fees & Tax Implications 💰
  While most funds no longer charge exit fees, some older super accounts may still have withdrawal costs. Also, transferring funds could affect your tax-free and taxable components, impacting how much you receive in retirement.

• Investment Performance 📊
  Not all super funds perform equally. A low-fee fund with poor returns could cost you more over time than a fund with slightly higher fees but strong long-term growth. Always compare past performance, asset allocation, and risk levels before consolidating.

ASIC Guidelines on Super Consolidation

ASIC (Australian Securities and Investments Commission) recommends taking these three key steps before consolidating your super:

1️⃣ Check for Lost Super 🔎
Use the ATO’s online services to locate lost or unclaimed super. Many Australians have forgotten accounts that could be recovered.

2️⃣ Compare Super Funds 📊
Look at fees, returns, insurance, and investment options before deciding which fund to consolidate into. Low fees don’t always mean better performance.

3️⃣ Seek Professional Advice 📞
Speaking with a licensed financial advisor can help you assess whether consolidation is the best move for your situation.

How to Consolidate Your Super (Step-by-Step Guide)

1️⃣ Gather Information 📝
Log in to myGov → ATO services to view all your super accounts.

2️⃣ Choose the Best Fund 💡
Based on performance, fees, and insurance, select the fund you want to keep.

3️⃣ Initiate the Transfer 🔄
Most funds offer a simple online transfer process, or you can use the ATO’s Superannuation Consolidation tool.

4️⃣ Confirm Completion ✅
Check your chosen fund to ensure all transfers are successful and update your employer with the new super details.

The Bottom Line

Superannuation consolidation can be a powerful way to save on fees and grow your retirement savings, but it’s essential to do it strategically. Always compare funds, check for insurance implications, and consult with a financial advisor to make sure you’re making the right choice.

Looking for expert guidance? Redwood Financial Planning is here to help. Book a free superannuation review today!

Disclaimer: The information provided in this blog is for general informational purposes only and does not constitute financial, tax, or investment advice. We recommend speaking with a qualified financial adviser before making any decisions regarding your superannuation. Every individual’s financial situation is unique, and personalised advice is essential to ensure the best outcome for your specific circumstances.