Thursday, 25th July 2013 – 1:30 pm

Pros and cons for consolidating your superannuation account

Topic discussed by Adam: Pros and cons for consolidating your superannuation account when you change employment and advice on accessing your superannuation early through total and permanent disability (TPD)

Adam Tayler has featured on the latest 2GB podcast for the Chris Smith Afternoon Show. He discussed and provided some valuable advice on ways to consolidate and roll your superannuation accounts into one. Adam also gave some insight into ways to accessing your superannuation early through total and permanent disablement (TPD). He discussed the importance of thoroughly looking through and understanding the terms and conditions of your super statements.

Adam also covered useful information about locating any lost super you may have and the benefits of merging or consolidating you superannuation accounts.

The transcript is available for this podcast and is below.

Adam Tayler’s Transcript:

Chris: Most of us have some insurances cover through superannuation fund, you could already be protected for total and permanent disability (TPD), accident and trauma. You might have life insurance, income protection which could be a great piece of mind for you.

Chris: A lot of us have super scattered all over the place. I did, I don’t now, and you may have it all over the place. What do you do if you try to merge it into one fund, how do you work out which fund it should move to, and what about accessing the super account balance earlier than retirement age if you permanently injured.

Chris: To answer all of these questions and to take your questions from Turner Freeman Lawyers, Adam Tayler is on the line from Queensland.

Chris: Stack to talk about total and permanent disability, income protection, life insurance, accident and trauma. First of all I bet that most people wouldn’t know of those what they are covered for from their insurance policy or through their superannuation policy.

Adam: Chris I think you’d win that bet, my experience is most people don’t even know they have any insurance attached to their superannuation let alone know what style of insurance it is.

Chris: And how is it, for example with a standard insurance like AMP what would a standard policy be?

Adam: Normally someone working in a particular industry will have a group policy for permanent and total and permanent disablement (TPD) and that in some circumstances income protection if you are temporarily disabled.

Chris: Right and if you like insurance companies hassling you frequently to take up income protection and many people might do that. But they may be covered nonetheless through their superannuation they currently hold.

Adam: It’s worth comparing. There are different products and costs and premiums out there. But superannuation is an area where most people don’t even realise that their superannuation attached to and then can compare properly to the private products out there they might be surprised.

Chris: What is the easiest way to find out if we have multiple superannuation accounts out there.

The best thing is to do is to contact the Australian Taxation Office (ATO) and do a lost super search. That will reveal any superannuation that’s been paid to the tax office because the superfund has lost contact with you.

Chris: Surprising how accounts people lose trace of, or lose track of and maybe that’s because in a lifetime now as opposed to previous generation we do more work in different places don’t we.

Adam: We have more flexible workforce and casual workforce. And I think people throughout their working career will certainly undertake many different jobs. Sometimes many different roles or jobs in different industries. And all of those industries have their own superannuation funds. I think there’s problem is diminishing now is the choice employees have where they superannuation go. In years gone by people simply follow their employers’ setup and sometime that was more than adequate. These days people have more choices about where they put their super.

Chris: And you have to go with other options sometimes.

Chris: Let’s go to a couple of callers before we talk about other aspects of today’s topic.

Linda- listener is asking questions

Linda: I’m just wondering with the total permanent disability TPD insurance with your superannuation am I covered even though I try and apply for total impairment disability outside the superannuation. Will they cover me because I’ve had cancer?

Adam: Generally the TPD coverage you get through your super, you don’t have to go through any health qualifications or assessment which is what you do with private insurance policies. So you will get a minimum level of cover through your super no matter what your history is. If you want to increase that cover than normally there is a requirement that to go through some sort of screening which may then exclude any pre-existing injuries. Those sorts of things.

Linda: So even though if something happens I’m still covered even though these are pre-existing.

Adam: That’s correct. I mean every policy is different – I have come across with company policies where they do exclude pre-existing conditions. But there are some where pre-existing conditions less than 2 years old might not be excluded but something older than that might be ok. Depend on your particular fund and particular insurance policy.

Linda: So might be worth asking this.

Adam: Absolutely.

Chris: On the back of what Linda has asked you, in particular according to the statistics women they are in a great disadvantage when it comes to their superannuation aren’t they?

Adam: They are. And I think in recent studies have shown that it’s not simply about the choices that the women are making or they are the private care giver or not it’s certainly a problem with the disparity of salary and it means that women are getting paid less than the men in the superannuation.

Chris: Women on average earn between 44% and 88% of a superannuation of a male earning the average wage. Which means if they do reach retirement or if they’re in a situation where the family split they got to be very careful how much they’ve contributed to superannuation?

Adam: That’s absolutely correct. These days it’s just doesn’t matter whether you’re a male, female a caregiver or not it’s really come down to salary. Superannuation is linked to salary and if that’s creating unfair results than I think that’s something that needs to be looked at.

Kevin – listener

Kevin: Do you know about this trio list?

Adam: Trio levy?

Kevin: Yes.

Adam: No I haven’t come across this.

Kevin: $55 million dollar grant to the victims of the trio collapse which will be recouped by AFRA as a levy on superannuation funds. So another words
incompetent regulation resulted in the government putting their hands into people’s superannuation funds.

Adam: The problem with these days is that governments are tinkering with superannuation and if you read the paper in the last couple of days they’re thinking about doing it again to mine coal elsewhere. Now that’s not what superannuation is designed for and I think that uncertainty creates issues not only for those close to the retirement but those who are starting their career. What they should do with superannuation and how they should deal with it.

Kevin: Well that’s one of the problems. Most young people nowadays don’t take much interest in their super and having a great difficulty trying to convince my children to get all of their money in just at least one fund and one lot of management fees.

Adam: That’s right and you’ll find that with multiple funds will have multiple insurance policies and you’ll be paying multiple premiums so you’re actually throwing money away.

Kevin: Yes absolutely mad. Because the management fees are a lot more reasonable if you only have one fund than having half a dozen funds.

Adam: Exactly right and fee do differ greatly between funds its worth shopping around.

Chris: Adam Tayler, from Turner Freeman our sponsors of the Legal Matter segment.

Tracey – listener

Tracey: I’ve got about 6 different super funds and I’m very confused as to how to roll it into one and which one to roll into. I’ve been ringing around and I’ve got a couple with death benefit and TPD in the fund and a few others that don’t have that. And I’d like to state that I haven’t worked for 2.5 years as I’m suffering a major depression and I’m starting to get financial difficulty and I’m just wondering how I go about doing something about it.

Adam: I think the first thing you need to look at is what total and permanent disablement is and do you qualify for that in your specific circumstances. TPD can be a misleading term. What it essentially means is that you can’t go back to your usual occupation that you are reasonably qualified at the time of your disablement. Now your policies may also come with some sort of income protection so if your situation is uncertain and you don’t know if your depression is going to be long standing or permanent, then temporarily whist you’re off work you can be accessing income protection. So I think the first thing you need to do is look at what is the coverage and what can you get out of that.

Adam: Now with your multiple accounts you might find that you’re in a position to where you can make multiple claims if you are total permanent disabled, or temporarily disabled from work because of an injury or illness then each of those insurance policies might respond.

Adam: It just depends on when you last worked which policy was current at that time and getting the particular terms and conditions of that fund.

Adam: The initial question you had about how do you go about consolidating your funds I think it’s something you do need to get some financial advice on and examine what are the benefits available to you under each of the policies. You also got to look at investment performances as well. That’s an important thing when it comes to super and you need some advice to do that from either a financial advisor or someone who knows that field. And make a comparison to that fee being paid, to the premiums what you getting in insurance and making a choice there informed by your advice.

Tracey: How much do they normally charge do you know?

Adam: Financial advisors I don’t it varies a lot. For example some banks will offer it free of charge so you can go there get a comparison done of your super policies and they will give you that advice without any cost.

Adam: There are others out there that will charge a fee to do it so it’s just all depends.

Adam: Its worth looking around at places that you may not think that you might be able to get financial advice from. In fact some super fund themselves will provide you with some independent financial advice. So that might be another benefit that’s attached to your super account.

Adam: Chris it’s not unusual. I’ve seen it a lot. And as I was saying the nature of our mobile workforce.

You’ve been very informative and there are so many rules to investigate when it comes to superannuation but at least we covered off a few point today.

Turner Freeman Legal Matters by Adam Tayler.