Combine super accounts and save money
- Created on Thursday, 10 August 2017 10:51
When starting out your career, getting your super in shape can be one of the smartest financial moves you’ll make.
If you’re like many Australians and you’ve already had more than one job – even if it was just a part-time job while you’re studying there’s a fair chance you could have more than one super account
Why does that matter?
You could be paying more fees than you need. This means less money in your super earning returns. Combining your super accounts can save on fees and get all your super in one place, making it easier for you to keep track of.
It’s a good idea to check if there are additional fees before closing an account, and what insurance cover and other benefits you have through your existing super.
It’s also worth considering if the super funds you may have had through working as a student are still right for you when you’re going to begin your career.
Industry funds are run to benefit members working in their particular sector. HESTA – the industry super fund more people in health and community services industry chose for their super – tailors products and services for their members. So, it’s worth considering what super funds may suit your particular needs and career choice.
Your super is one of the most significant investments you’ll make in your life time. The type of super fund you choose and how much you contribute can have big long-term impacts on your financial future.
Some helpful tips on choosing a super fund
There are many different types of super funds. Each offers different benefits and features to their members. It’s worthwhile taking some time to consider the following when selecting your super fund:
The fees charged on your super can have a big impact on your balance over time. Compare funds to ensure the fees you will be paying are good value. You can do that at selectingsuper.com.au
- Investment options
Most funds offer a default option, which is where your super is invested automatically if you don’t choose an investment option when joining a super fund. While there are lots of different default options out there, they generally are invested in a diverse range of assets and target a high enough return to ensure the long-term growth of your super. HESTA’s default option, Core Pool, for example is invested in a diversified and balanced mix of assets. To make the most out of your super you can view the investment options offered to see whether they provide the flexibility to change your investment approach as your personal circumstances change.
- Extra benefits
Different funds offer varying types of benefits to their members. For example, industry funds typically offer lower cost insurance and personal advice at no extra cost.
Super is a long-term investment. So, you should consider long-term investment performance of funds over at least five years. While past performance is not a reliable indicator of future performance, choosing a fund that has achieved strong, long-term investment returns may be better than trying to go with last year’s top performer.
Funds offer different levels and types of insurance. Compare how much insurance is offered and what it will cost.
What are the different types of super funds?
Industry funds are run to benefit members, not profit from them. Typically they have lower fees and serve a specific industry. These funds are governed by trustee boards and are run solely to improve members’ futures. Members typically receive benefits such as low-cost insurance and access to personal advice about their super at no extra cost. Funds like HESTA, Hostplus, Australian Super and REST are all industry funds.
Retail funds are typically run by banks or investment companies. They are run to generate a profit for shareholders. They generally offer a larger choice of investment options to members.
Self Managed Super Funds (SMSFs)
SMSFs allow individuals to have control and responsibility for their super. Running an SMSF involves a significant amount of responsibility, administration and time. When an SMSF is established, those that set it up automatically become both a member and a trustee of the fund.
Trustees of an SMSF are ultimately responsible for making sure their fund is legally compliant. SMSFs are typically suitable for people with large super balances this ensures the running costs are worthwhile.
People talk about topping up their super, what does this mean and what is the benefit?
Putting extra into your super each month can make a big impact in the future. Even as little as $20 a week can add up to thousands when you retire. Find out how
Salary sacrifice (before tax contributions)
This is an arrangement between you and your employer. You consent to reduce your gross salary by a nominated amount, which your employer uses to increase their super contributions for you.
Employee after-tax contributions
These are amounts paid from your after-tax income. You and your employer can arrange for these contributions to be deducted from your after-tax income and paid directly to your super fund on your behalf.
There are limits on how much you can contribute to your super. Speak to your payroll department or find out more at the Australian Tax Office’s website ato.gov.au
What if I’m self-employed or a contractor?
There’s a lot to think about if you’re going to work for yourself or as a contractor. But setting up your super can be simple and could have lots of added benefits.
As a first step, it’s important to understand if the person paying you is actually your employer and must contribute to your super.
Hirers must pay super contributions for independent contractors if the contractors:
- are paid wholly or principally for their personal labour and skills
- perform the contract work personally, and
- are paid for hours worked rather than to achieve a result.
You can find out more about super rules and contracting at the Australian Tax Office’s website ato.gov.au
Industry funds typically provide personal advice to members, and affordable financial planning. HESTA members can access personal advice on their super at no extra cost. This includes advice on your contribution and investment strategies, insurance and super regulations and rules.
Issued by H.E.S.T. Australia Ltd ABN 66 006 818 695 AFSL 235249, the Trustee of Health Employees Superannuation Trust Australia (HESTA) ABN 64 971 749 321. Investments may go up or down. Past performance is not a reliable indicator of future performance. This information is of a general nature. It does not take into account your objectives, financial situation or specific needs so you should look at your own financial position and requirements before making a decision. You may wish to consult an adviser when doing this. Before making a decision about HESTA products you should read the relevant Product Disclosure Statement (call 1800 813 327 or visit hesta.com.au for a copy), and consider all relevant risks (hesta.com.au/understandingrisk).