Why you should combine multiple super accounts
Combining takes just a few minutes in the Rest app and makes managing your super easier. The less accounts you have, the clearer an understanding you have of your retirement position. Plus, no more fear of ‘lost super’.
Less accounts also means less account fees saving you in both the short and long-term.
The difference between Jenny and George
Jenny and George both have super of $30,000. Both receive employer super contributions of $5,000 per annum. Jenny recently consolidated her super into one fund, which charges an administration fee of $10 per month, plus asset-based management- and investment fees which total 0.7% p.a.
What's the difference?
George’s super is divided between five different funds. His employer contributions are paid into the same fund as Jenny's. As George has recently changed jobs, his current balance in this fund is $0, and his $30,000 super is spread over four super funds, each charging the same fee as Jenny's fund.
What's the outcome?
Over 30 years of employer super contributions only, Jenny's super balance grows to $266,100 (in today’s $) compared to George's balance of just $243,600.
A difference of $22,500, simply because Jenny consolidated her super into one fund.
Click here for important information about the case study
Situation: Employer contributions of $5,000 p.a. in the first year increasing with wage inflation. Wage inflation of 3.5% p.a., which is 1% above the mid-point of the Reserve Bank of Australia’s target for consumer price inflation.
Tax: Employer contributions are taxed at 15% and assumed investment earnings are taxed at an average rate of 8.9% p.a.
Investment: Assumed investment earnings are 6.5% p.a. net of all asset-based fees and tax. Investment earnings are forward-looking and are based on long-term historical asset class averages modelled on the Rest's Core Strategy investment option. Actual returns may differ considerably and may even be negative.
Fees: Allowance is made for fees in each super fund of $120 p.a. (note that Rest Super's current fees are less than this amount - please refer to the most recent PDS for current details) Administration fee and 0.7% p.a. asset-based fees (including all asset-based administration- and investment management fees). Dollar-based fees increase each year in line with wage inflation. No allowance is made for insurance premiums.
General: The projection starts from 1 July 2014 and figures are expressed in terms of current purchasing power, i.e. figures take into account assumed future changes in the cost of living. Past performance is not indicative of future performance. Even a small change in the rate of return could have a significant impact on the figures shown. This case study assumes the same fees are charged across all of George’s funds, as in Jenny’s fund. Fees may not be payable on small balances. Some super funds charge exit fees if you decide to roll money out of their fund. These costs may end up being higher than any fee savings you might achieve through consolidation. The benefits of consolidation may be reduced if the fees involved are lower than those assumed in this case study. Fees are only one factor to consider. Transferring your money out of a fund could also impact the level of insurance cover or other benefits you have in that fund and you lose that insurance cover and/or may not be able to obtain the same cover in your new fund. In some cases you may be able to transfer insurance cover between funds. These assumptions have been approved by Rice Warner Pty Ltd, September 2014