Your superannuation fund is one of the biggest investments you’ll ever make. It holds decades’ worth of hard-earned contributions. But like any investment, not all funds perform equally—and not every super fund is right for you long-term.
If you’re considering changing your super fund, take a moment to pause and assess. Switching isn’t difficult, but whether you’re chasing better returns, lower fees, or want more control over your future, it’s a decision worth getting right.
This guide weighs up the pros and risks, breaking down how to change super funds to support your retirement goals or when it’s better to stay put.
First, What Are Superannuation Funds?
Let’s start with the basics. If you’re wondering what superannuation funds are, think of them as retirement savings accounts managed and invested on your behalf. Your employer contributes a percentage of your salary (currently 11%) to your chosen fund, which is then invested in assets like shares, property, and cash to grow your balance over time.
Each fund offers different investment strategies, fee structures, insurance offerings, and digital tools. That’s why comparing super funds and knowing your options is so important. It’s also why switching funds—or consolidating multiple funds—can make a big impact on your balance.
When Should You Switch Super Funds
Changing your super fund isn’t something to do on a whim, but there are situations where switching could be a smart financial decision. After all, if you’ve had multiple jobs or haven’t reviewed your super in a while, you might be missing out on better options. It might be time to switch if:
- Your current fund charges high fees but underperforms compared to others in the same risk category.
- You want access to more sustainable, ethical, or values-aligned investment options.
- You’ve found a fund with stronger long-term performance and better features.
- Your fund doesn’t provide the level of service, tools, or insurance flexibility you need.
- You’ve lost track of old funds and want to consolidate for better control.
Understanding how to change super funds is easy—making the right decision takes a bit more thought. Let’s explore.
The Risks of Switching Super Funds
Insurance Loss
If your current super fund includes life, income protection, or total permanent disability (TPD) insurance, changing funds may cancel that cover. Before switching, check what insurance you have and whether you can transfer it or obtain a comparable policy in your new fund.
Exit or Transfer Fees
Most funds don’t charge exit fees anymore, but it’s worth checking for any hidden charges or restrictions, especially if you’re in an older or employer-specific fund.
Investment Disruption
When you change funds, your investments may be sold and reallocated. This could mean your money is out of the market for a little while. And if your old investments are sold for more than you paid, that profit (known as a capital gain) could trigger a tax bill.
Defined Benefit Funds
Some older super members have defined benefit plans, which offer set payouts based on years of service and salary. These are rarely offered today and can be extremely valuable. Think twice (and speak to a financial adviser) before giving one up.
Things to Do Before You Switch Funds
- Compare Performance & Fees: Use comparison tools like the ATO’s YourSuper and compare long-term returns (5 to 10 years), investment options, and the total cost of managing your account.
- Check Your Insurance: Understand what insurance coverage you currently have through super, whether you still need it, and if your new fund offers a similar cover. If not, can you replace it and at what cost?
- Think About Timing: If markets are volatile, it may not be the best time to sell and reallocate investments. Consider consulting a financial adviser before you make the switch.
- Review Your Investment Strategy: Make sure your new fund offers the investment mix you want for your risk appetite and stage of life, whether growth-focused, conservative, or ethically screened.
- Consolidate Correctly: If you have more than one fund, consider consolidating them into your chosen fund to avoid paying multiple fees. But be careful not to consolidate funds that include insurance you still need.
- Consider an SMSF: If you’re interested in hands-on investing and asset flexibility, you may want to switch to a self-managed super fund (SMSF). Explore our guide: What is an SMSF, or get in touch with Spark Accountants to learn more; there are multiple benefits of hiring SMSF accountants.
When It’s Better to Stay Put
Sometimes, keeping your current fund is the smarter move. Think twice if:
- Your fund has consistently strong returns and reasonable fees.
- You’ve got valuable insurance coverage you wouldn’t be able to replace.
- You’re in a defined benefit fund.
- You’re already set up with a fund you understand and actively manage.
In many cases, reviewing and updating your current investment choices within your fund could be more beneficial than switching completely. Don’t rush this decision; get expert advice.
Get the Most From Your Super
Now that we’ve explored what superannuation funds are and the benefits of changing or staying, you can make your next move. Unsure what suits your needs? Contact Spark Accountants—let’s chat about your goals and how you can stay on top of your super.
