A common misconception about changing jobs is that you also have to change your superannuation fund — in the majority of situations this is not the case. You generally have the option to change funds when you start a new job and the choice is yours. You can either provide your new employer with the details of your current fund and they will make payments into that, or you can opt to have your new employer open another super fund for you.
Is your current super fund right for you?
It is worth having a think at this point in time if your super fund is still right for you. Is your super performing the way in which you hoped, that is, is it growing for your retirement? Does your current super fund cover your needs in terms of insurances for where you are at in your life?
If you do happen to have multiple super funds on the go, it may be a good time to consolidate them into a new fund or your best performing current fund, and seek financial advice about the best way to do this for your situation.
What should you look for in a Super fund?
There are many factors that you should consider when choosing a super fund. Let’s face it - there are many of them to choose from in the market today.
- Compare ongoing fees and charges of your fund;
- Research the funds' long-term performance;
- Consider the insurance options available for you and the suitability of these to your profession.
Does changing the type of employment affect your super cover?
Yes, it does. If you’re changing between being a direct employee to contracting, or becoming self-employed, the way in which your super is paid can differ. If you become a contractor there are certain criteria you need to meet for you to be deemed an employee and receive super contributions. If you become self-employed it is your responsibility to pay yourself superannuation into your account (but it is not compulsory). If you choose not to pay in to your super, and your account becomes dormant, you may void all insurances, as per the legislative changes that occurred 1 July 2019 out of the Royal Banking Commission.
It may also be that if you choose to go into what is deemed a “hazardous” occupation, or if start casual work, any insurance you already have becomes null and void. Many insurers will not insure workers who undertake hazardous work duties, or work less than 15 hours a week, so you should check with your super fund about this, and avoid paying premiums on insurance that may not protect you like you thought.
Insurances attached to your super fund
Super funds typically have three types of insurances policies attached to them. They include:
- Life insurance (also known as death cover): this cover is usually a lump-sum payment to your super fund if you die or become terminally ill. It can assist your family or loved ones to pay for financial costs and future living expenses.
- Total and permanent disability: covers you if you suffer a disability that prevents you from ever working again.
- Income protection cover: helps you if you are not able to make your living expenses payments due to illness or injury and you’re unable to work.
It is important to take stock of your insurances as your life changes, as you may find you are not covered for what you expected when the unexpected happens. If you change jobs and in turn change you Super fund, be sure to compare the changes and expect to have new wait periods on new policies.
How Shine Lawyers can help
Shine Lawyers everyday assists Australians who cannot work due to injury or illness access their super and insurance entitlements.
Written by Shine Lawyers. Last modified: January 7, 2020.