I have said it before and I will say it again, I love superannuation! It surprises me that many people are disillusioned with super. I understand that it is complex and maybe it’s frustrating that you can’t access it till you retire but that is no reason to ignore it, and you certainly shouldn’t change funds without some consideration. So here are my top 4 areas for you to consider before switching funds:
1. Look out for insurance
Most super funds will provide some basic level of insurance (often death cover, TPD which stands for Total and Permanent Disablement and in some funds you may also have salary continuance, also known as income protection cover). Super funds can offer basic levels of cover at very affordable premiums (most of the time) so you will need to take this into consideration and check whether you have access to cover in another fund as when you roll out your existing cover will automatically cancel. Also, if you have a MEDICAL CONDITION, you may not be eligible for insurance elsewhere so keeping cover could be important.
Fees are an important consideration when it comes to your super and they can very quickly add up. However they are not the only consideration when it comes to choosing a super fund. Whilst your balance is growing, it makes sense to keep fees low. When you have a larger balance there are other considerations that may become important to you and you should seek advice to understand your options.
3. Investment Performance
In my opinion investment performance is not a major reason to change super funds. This is because past performance doesn’t guarantee future performance. Your chosen investment option should be in line with your investment risk tolerance levels as well as your return expectations, whilst giving some consideration to the economic conditions at the time. Monitor how your super fund performs over time for a more accurate guide.
4. Don’t forget to consider tax
For those of you that make personal contributions to super, you will need to ensure you claim a deduction for these BEFORE you switch your fund, otherwise you may not be eligible.