If you’ve seen good returns over the long-term, sticking with the same fund may ensure your retirement savings continue to grow in line with your goals
On the flip side, switching to a new fund could give you access to lower fees which can result in higher returns
You may be able to access different investment options that better suit your investment goals and the level of risk.
Whether to stick with your existing super fund or switch to a new one, is one of the many decisions you need to make when starting a new job.
While there are benefits to sticking with the same super fund, such as maintaining your existing investment strategy and insurance cover, there are also potential drawbacks.
In this article, we explore the pros and cons of sticking with the same fund to help you decide what’s best for you.
What happens to your super when you start a new job?
In November 2021, the Federal Government brought in super stapling reforms to prevent people from acquiring a new account every time they start a new job and having multiple super accounts—this can cost you heavily in fees.
As part of these reforms, your existing super account will now follow you as you change jobs, unless you specifically request to move to another fund. For example, your new employer may give you access to a corporate super plan that has lower fees or a more competitive insurance offering.
Key benefits of sticking with your super fund
1. Maintain your investment strategy
If you’re happy with your current investment options and have seen good returns over the long-term, sticking with the same fund may help ensure your retirement savings continue to grow in line with your long-term goals and objectives.
2. Keeping your insurance cover
Many super funds offer insurance cover as part of their membership, such as life insurance, total and permanent disability and income protection.
By sticking with your existing fund, you may be able to keep paying low premiums which may not be available elsewhere.
Through your insurance cover, you may also have access to health, wellness and recovery programs at no additional cost.
3. Member benefits
Many super funds offer member benefits which are discounts you can access on products and services as well as wellbeing programs.
Changing super funds may mean you lose access to some of these benefits.
4. Financial coaching
If you value the experience of experts, many funds offer general financial advice to members at no extra cost.
Financial coaches can also help you with other aspects of your financial life such as savings, insurance, tax, debt—while keeping you on track to achieve your goals. This may include areas like:
How to invest your super
Making contributions into super
How much super you need at retirement
Starting a pension.
Changing super funds may mean you lose access to financial coaching which could greatly benefit you.
5. More investment options
Some super funds offer more investment options so you can choose where your money’s invested, depending on what aligns with your values and risk tolerance. Otherwise, you can leave it up their investment experts to invest on your behalf.
6. Financial education
Many funds offer educational content that is simple to understand and interactive.
This information provides helpful tips and insights about super, retirement or investing as well as tools and calculators so you can make more informed decisions when it comes to managing your money.
Drawbacks of sticking with your exiting super fund
1. Missed opportunities for improved investment performance
Super fund performance can vary significantly from year to year, and some funds consistently outperform others. By switching to a fund with a better track record of performance, you may be able to boost your retirement savings over the long term.
2. Higher fees and charges
You may be paying higher fees and charges than you need to.
Super funds charge a range of fees, including administration fees, investment fees, and insurance premiums. By switching to a new fund, you could access lower fees which can result in higher returns.
3. Limited investment options
Each super fund offers its own range of investment options, which may include shares, property, cash, and fixed interest.
By switching super funds, you may be able to access different investment options that better suit your investment goals and the level of risk you’re most comfortable with taking on. For example, you may find a fund that has a greater focus on sustainable investment options, if this is important to you.
4. Insurance cover may not be sufficient
Over time, your insurance needs may change so the cover provided by your current super fund may no longer be sufficient.
But before making any changes, check the eligibility requirements or age limits that apply.
Bottom line: sticking with the same super fund does have advantages, but if it’s not delivering what you need, then it may be time to make the necessary changes to ensure you’re getting the best possible return on your investment.
*Based on SuperRatings Fund Crediting Rate Survey, SR50 MySuper Index to March 2023.
Important information and disclaimer
This article has been prepared by NULIS Nominees (Australia) Limited ABN 80 008 515 633 AFSL 236465 (NULIS) as trustee of the MLC Super Fund ABN 70 732 426 024. The information in this article is current as at June 2021 but may cease to be accurate in the future.
NULIS is part of the group of companies comprising IOOF Holdings Ltd ABN 49 100 103 722 and its related bodies corporate (IOOF Group).
Opinions constitute our judgement at the time of preparation. In some cases information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way.
To the extent that the information in this article is or contains advice, it does not take into account any particular person’s objectives, financial situation or needs. Before acting on the information, you should consider the relevant Product Disclosure Statement, consider the product’s appropriateness to you having regard to your personal objectives, financial situation and needs, and consider obtaining independent advice. The Product Disclosure Statement for the MLC Super Fund is available at https://www.mlc.com.au/personal/superannuation/products or can be obtained by calling 132 652 (Monday to Friday between 8am and 6pm AEST/AEDT). Returns are not guaranteed and past performance is not a reliable indicator of future performance. The value of an investment may rise or fall with the changes in the market. You should not rely on this article to determine your personal tax obligations. Please consult a registered tax agent for this purpose. Subject to terms implied by law and which cannot be excluded, neither NULIS nor any member of the IOOF Group accepts responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in the information in this communication.