Changing jobs? Don't leave your super behind
09 October 2018
Securing a new job is an exciting time and one that should be celebrated - but don't forget about your super. When switching employers you will be faced with some decisions regarding your super strategy. Here's what you need to do to be prepared.
Find out about your new super situation
Once you have secured a job offer and are settled on your new career destination it can be easy to leave all your planning until after you have started your new role. But where your super is concerned, the sooner you prepare the less likely you are to lose track of your fund.
Changing jobs means you have a few decisions to make regarding your super.
When you start your new job the Australian Taxation Office requires employers to provide you with a Standard Choice form. This form will offer you the option of providing the details of your current super fund so that your new employer can make contributions to this fund, or join the company's own default super. If you do not provide your new employer with your decision they can select their default super for you.
You should think carefully about whether it will be better to continue with your current super fund or start a new one. Your decision should take into account:
- The fees of both super funds
- The history of long-term investment performance
- The availability of advice and support from the super funds
- Which fund provides the most suitable insurance options
- Access to corporate super plans that could have more competitive fees and discounts.
If you decide to stick with your current super fund, and once you have provided your new employer with the details and ensured that they can pay in their contribution, your job is done. However, if you decide you wish to join the company scheme you must also decide whether to combine your two super accounts or keep them separate.
How to combine your super
Consolidating your super accounts or rolling them over into one, is generally considered to be the best way to manage your retirement savings. This is because it means you are paying only a single set of fees so more is going into your nest-egg. From a practical perspective, it also reduces the amount of paperwork you have to keep track of and makes it less likely that you will lose any of your savings over your career.
Before consolidating your super it is best to double check the following factors:
- Are there any exit fees you will have to pay?
- Can your employer make contributions to your chosen fund?
- Will your insurance will be covered through your chosen fund?
Once you have fully researched and chosen which super fund you wish to roll your funds into you can transfer the funds through the Australian Government's myGov website or by contacting your new super fund and requesting to have your funds transferred to them. If you’re an LGS member, you can easily consolidate your other super accounts into your LGS account in just a few clicks.
Moving classes of employment can change the rules regarding your super.
What about changes to classes of employment?
Keeping track of your super after a job change can become more complicated if your new role falls into a different class of employment. For example, moving from full-time to casual or contract work. Each of these classes comes with slightly different super rules and it's important to know your rights.
If you take on casual work your employer is required to pay a super contribution of 9.5% of your ordinary wage. This contribution must be paid at least every three months, provided that you fall under the following criteria:
- You earn $450 or more before tax every month and,
- You are over 18, or
- You are under 18 but work more than 30 hours a week.
The $450 must come from a single employer rather than multiple casual employers and if they wish to it is possible for employers to make contributions to your super fund even if you don't meet all the criteria.
A contract worker is defined as someone who is paid to achieve a specific result and provides the majority of the assets needed. The exact rules around super for contractors are more difficult to define as they relate to specific circumstances, however, in general you can expect to receive the full 9.5% contribution from those who have made use of your services.
Super contributions are also required if an employer pays you to:
- Fulfil a verbal or written contract where more than 50% of the total amount to be paid is for your labour rather than materials or other aspects
- Use your personal labour and skills
- Perform the contracted work personally rather than delegating the work to someone else.
To find out more about keeping track of your super when you change jobs, get in touch with our team at LGS.
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