20 Oct Risks of Rolling Your Superannuation
So you are considering rolling your superannuation accounts? Here is a list of what you need to consider.
1. Insurance – be very careful here. Chances are your existing super account has an insurance policy attached. You need to check to see exactly what cover you have in place. You then need to determine whether you need to retain it or not. Changes in your health may make obtaining insurance elsewhere difficult. Rolling your superannuation cancels the insurance policy. This may be a policy that you can not replace so look before you leap. Ensure that you have obtained adequate insurance in the consolidated super account BEFORE rolling your superannuation and closing any super funds.
2. Compare Investment offerings – far too often we hear a focus on fees. The industry super advertisements talk about this fee versus another and the differences in return are negligible. Instead look at the investment offering. Can the super fund that you are rolling your superannuation to provide direct shares or term deposits or hundreds and hundreds of unique fund managers? If this is what you are looking for, that is the ability to diversify, then consider fees thereafter. A half percent difference in fees is negligible if you have access to investments that earn significantly more than half a percent difference.
3. Use an adviser – Advisers will consider your needs and requirements in conjunction with your term to retirement and put
forward a suitable range of both super funds and investments within the fund. They will consider what insurance needs to be
retained and in what format. They can determine the best cover to hold and in what entity. Fees that you pay an adviser really are minor versus the long term benefit of getting it set up right. This helps you to avoid pitfalls around rolling your superannuation.
What about rolling your superannuation and estate planning?
4. Wills & Super – Super is not distributed as per your will. A separate nomination must be provided in order to determine who receives your superannuation money. This may be binding or non binding and may be left to your estate or beneficiaries. This is a mine field and should be addressed with your legal professional in conjunction with your adviser to avoid the fate of your super being left to the discretion of the trustee. When you are rolling your superannuation you need to ensure that this is in order. This is even more pronounced if the super has insurance attached to it. This is not the end of the areas you should look at when you roll your superannuation. Its a guide and to get the most out of it, get advice. Rolling your superannuation, get advice!