Many in retirement are travelling comfortably, with three key factors contributing to their happiness – good physical and mental health and enough money to enjoy life.
Perhaps the assumption that markets are still anchored by predictable economic policies needs to be challenged. For the first time since the fall of the Berlin Wall, political volatility – once background noise – is potentially reshaping investment risk at a structural level.
Moving superannuation funds is no walk in the park
Industry superannuation funds may be some of the lowest-cost funds available, but that’s not cutting much ice with the regulator.
The Australian Prudential Regulation Authority (APRA) has conducted several probing reviews and investigations in recent years and too often has been shocked to discover these funds’ failings have been at the financial cost of members.
Many funds have not lived up to their promises to implement retirement income strategies; others have been called out for poor practices around marketing and administrative spending.
If your superannuation fund has been in the news once too often, you may be contemplating getting out, especially if you are in retirement or it is beckoning, and you want a more personalised service. Moving to a self-managed super fund (SMSF) is one option – but not for everyone. So, the hunt will be on to find another fund.
This is exactly the position I found myself in – a member of a fund that had been in the press for all the wrong reasons. Enough was enough and I decided to jump ship – not to an SMSF (too much paperwork) but to another industry fund.
Hopefully, I’m not that far from retirement, so I opted for a low-cost fund with good performance over the longer term and the resources to offer its members a range of retirement income products by the time I need them.
I have been writing about super longer than I care to remember, so I assumed it would be a walk in the park.
While joining the new fund was simple, taking less than 15 minutes, there was far more to it than that. Luckily, I’m familiar with super, but for the vast majority these other issues have the potential to cause financial pain.
Life and total and permanent disability insurance
Funds are required to offer their members life and total and permanent disability (TPD) insurance, although this is optional for people under 25 and if you have less than $6,000 in superannuation. Most funds also offer an optional form of income protection insurance.
As a homeowner with a family, I didn’t want to lose coverage or find myself without coverage at any stage. But it was a Herculean task to discover how my insurance coverage would work while my funds transitioned from the old to new fund.
I carefully read the product disclosure statement (PDS) but at 28 pages, with a separate guide on insurance of 44 pages, I suspect most people wouldn’t bother.
Even after reading the PDS, I called the new fund to confirm my research – I wouldn’t have cover in my fund until there was a minimum balance of $6,000 and my employer had contributed to my fund.
I also discovered there was an option to transfer my existing cover levels from my old to new fund. While the offerings were very similar, I did have slightly higher TPD and income protection in my old fund, so I filled out the relevant form to have that transferred.
This option did come with the warning not to transfer my super into the new fund until they had confirmed the new cover. I had (incorrectly) assumed this meant my insurance would start on the date my existing cover transferred. But this was not the case, and I still needed my employer to contribute before any cover in the new fund would start.
I had to follow-up several times before they could confirm the insurance transfer had taken place, but I eventually got a letter (that’s right, snail mail) confirming the new cover was the same as my previous fund.
Moving the money
Oddly, I found this part the hardest because it was the most nerve-wracking. The new fund made the process very easy and automated, but it’s still a lot of money to be moved in a world where scammers could be hiding around any digital corner.
One reason I had been considering changing funds for some time was my old fund’s lack of multi-factor authentication. The new fund doesn’t have it for every login but says further authentication is used for member-critical actions such as registering for an account online or resetting a password within the member portal and the mobile app.
It only took a few days for the funds to turn up in my new account and I have found the new fund’s online portal slightly easier to navigate.
The process of registering a new account and having my superannuation funds transferred was relatively simple. My new fund dealt directly with my old fund; it saved me the embarrassment of telling them I was leaving.
However, I don’t think I would have understood the details of what was involved – like when my insurance cover started and getting the same level of life, TPD and income cover transferred with my fund transfer – if I hadn’t been writing about superannuation for decades.
Most super funds’ PDSs suggest that you should consider getting financial advice before changing funds. For most people, I would concur. In my case, hopefully I won’t have to do it again.
