Why multiple super funds may be reducing your retirement savings

 Superannuation consolidation: why multiple super funds could be costing you money 

Many individuals who are not actively engaged with their superannuation often do not provide their existing super fund details when starting a new job. As a result, their new employer may open a default superannuation account on their behalf.

Over time, particularly through multiple job changes, this can result in individuals unintentionally accumulating four or five separate superannuation funds, often with relatively low balances in each account.

This is a common situation across Australia and typically occurs through default employer processes rather than deliberate financial decision-making.

In many cases, members may be paying for insurance cover they did not actively choose. When multiple super accounts exist, this insurance may also be duplicated across funds.

A key issue is that most insurers will not pay multiple claims for the same type of cover across different super funds. This means you could be paying multiple premiums for insurance that may only ever provide a single benefit.

In practical terms, this is similar to paying for multiple car insurance policies but only being able to claim on one vehicle in the event of an incident.

 The impact of multiple funds on long-term savings 

Having multiple super accounts can create several long-term challenges:

• Higher total administration fees
• Duplicated insurance premiums
• Reduced ability to track overall performance
• Fragmented investment strategies
• Increased administrative complexity

Even relatively small annual differences in fees can compound significantly over a working lifetime, reducing the final retirement balance.

 How to prevent new super funds being opened 

If you change employers, it is important to proactively provide your existing superannuation details. You can do this by requesting a superannuation fund nomination form and supplying it to your new employer.

This ensures your super contributions continue to flow into your existing fund rather than creating a new account.

 Reviewing your insurance cover 

It is also important to regularly review the insurance held within your superannuation funds.

You should check:

• Whether you have duplicate cover across multiple funds
• Whether premiums are being deducted from inactive or low-balance accounts
• Whether your current level of cover aligns with your financial needs
• Whether you are paying for insurance you may not be able to claim on

Understanding your insurance structure can help ensure you are not paying unnecessary premiums.

 Why consolidating superannuation may help 

Consolidating your superannuation into a single account can help you:

• Reduce duplicate fees and charges
• Avoid paying multiple insurance premiums
• Simplify account management
• Improve visibility of your total retirement savings
• Streamline investment performance tracking

In many cases, consolidation can be completed through the ATO via your myGov account or directly through your chosen super fund.

However, it is important to consider your personal circumstances before consolidating, particularly in relation to insurance cover or any specific fund benefits.