For many people, the main fund they have is the one their current employer contributes to. They may have other funds that previous employers paid into. They may also have private superannuation funds – funds they opened up themselves to make contributions.
The problem is that as time goes on, some of these funds are no longer great.
I use the example of a Holden Commodore from 1995 – 20 years ago.
The car was great for its time – modern with all the latest features.
The problem is that time has moved on and what we expect from a car has changed.
So if we compare the 1995 Commodore with the latest 2015 Commodore, we see a marked difference. The old car just doesn’t compare. It was once good, but not any more.
So it is with your super funds. You may have a fund that’s the equivalent of the 1995 Holden Commodore. It may still work and get you from A to B, but there may be better options.
And if you still owned the 1995 Commodore, you’d think about upgrading to a newer car. You may not proceed, but you’d at least think about it from time to time.
But people see their super funds a bit differently.
Because we don’t use our super every day (unlike our cars), we don’t tend to think about it.
And there’s no immediate pain in having an older super fund. If you were driving around in a 1995 Commodore you’d constantly be reminded of the newer options that are available and you may even be a little embarrassed by your car. But not so with super because it’s much more intangible.
Your older fund probably has a more restricted range of investment options. It may also have higher fees when compared to the funds that are open today.
Many older superannuation funds are also limited in how they can receive contributions (few accept BPay) and not many older funds offer binding death benefit nominations.
But don’t rush to pull your money out of an older fund into a new one. You need to get advice first.
Your existing super fund may have some insurance benefits. If you move to a new fund can you transfer these across, or are they lost? This is particularly important if you’ve had health issues that may preclude you from obtaining newer cover at standard rates.
Also, your existing fund may have some exit penalties for early withdrawal (a rollover to a new super fund counts as a withdrawal).
There may be benefits in consolidating your super funds, particularly if you have any older funds. But you need to get advice to ensure you’re doing the right thing.
Above all else, start to take an interest in your money. Do your research, learn more about the superannuation system and understand your options.
You need to plan for your future, not sit back and see what happens.
And a good financial planner will understand your apathy towards super – we don’t expect you to be excited about it just because we are!