Why having several super accounts can sometimes be a terrible idea

By Sam McKeith 02 October 2019 3 min read

Most people understand that superannuation can be really important if you want to enjoy financial security later in life, and that when it comes to super you need to plan ahead.

But, even so, many people, especially those at the younger end of the age scale, can get into trouble by not focusing on super. After all, it’s not the most exciting thing to think about!

While it might not make the most scintillating topic, superannuation is nevertheless a big part of building financial security down the track and so it’s critical to get it right.

One of the big mistakes people tend to make when it comes to super is having multiple accounts — if that’s not your intention, of course. (There might be times where multiple super accounts is necessary or makes financial sense for you.)

Here are some things to consider if you do currently have multiple super accounts.

Why you can end up with multiple accounts

You might not have ended up with several super accounts on purpose. Instead, what often happens is that you change jobs and your new boss sets you up with a new super fund and directs 9.5 per cent of your wages into it. That’s if you don’t elect to use your existing super account.

What tends to occur, if you switch jobs every couple of years and don’t use a super fund of your choice when you start each gig, is that over time you accumulate accounts.

What’s so bad about this you ask? Put simply, you can end up with one active account – the one from your current job – and several others that aren’t having any money contributed but are having fees taken out. Over time, this can seriously eat up your super.

By contrast, the benefits of having all your super in one place can include cutting your paperwork and admin time, saving on fees, and making it easier to keep track of your super.

What to do about it?

If you’re someone with multiple accounts, there’s an easy solution: consolidating your super into one fund.

Transferring all your super into one fund is usually a simple process thanks in part to government moves in recent years to establish easy-to-use online self-service portals.

And here’s the good news: consolidating your multiple accounts usually only takes an hour or two of paperwork and involves not much more than notifying your active super fund. Then, it’s all upside.

First of all, check the benefits and risks of each fund you have so you can decide which one is best for you. Once you’ve chosen a fund that suits your circumstances, open an account.

Remember to ask your active fund to be clear on all the details your employer will need in order to pay your super into that fund, and be extra careful to make sure you get your desired level of insurance (if any) before you switch to the new fund.

Then comes the real fun part: rolling over your old super into your chosen fund. As the federal government’s MoneySmart site points out, you can do this online via myGov. You can also find out more info on the process at the ATO’s site.

Before deciding to consolidate funds, you should consider how rolling over your existing super funds will impact you. Things you might want to think about before you decide to consolidate include how the fees, risks and benefits of your other super funds compare to the fund you would be consolidating into. By rolling over the full value of an existing super account, your existing super account will be closed, and you may lose some benefits, such as life insurance.

Basically, the point is that not all funds have the same benefits. Talking to a professional financial adviser can help you make this decision.

With that said, if you want to shop around for the best super fund, comparison sites can be a useful resource, but you shouldn't decide on your super fund on the website rating alone.

Some super comparison websites — responsible for their own data and publications — include Canstar, RateCity, and SuperRatings. Remember, to weigh up fees and costs against factors like risk, likely returns, services and insurance when assessing funds.

Words by
Sam McKeith Right Chevron

Sam is an award-winning writer, producer and director who brings a wealth of experience as a storyteller and journalist for a range of leading media outlets.

Why having several super accounts can sometimes be a terrible idea