How to combine multiple super accounts

Extra super accounts are mostly an accident of employment. Before November 2021 a new job with no fund nominated meant a new default account, and a career of four or five employers could produce four or five accounts. Millions of Australians hold more than one, and most did not choose to.

The cost of holding them is not the headline percentage. It is the flat part of each administration fee, charged in full on every account regardless of how little is in it, plus any insurance premiums still being deducted from a balance nobody is contributing to.

Some of this is already handled for you. Where an account has received no contributions for 16 months, holds less than $6,000 and has no insurance attached, the fund must transfer it to the Australian Taxation Office, which then pays it into an active account of yours where it can. That rule catches dormant small balances, and it catches nothing else. An account with $30,000 in it, or one still receiving the occasional contribution, generally stays where it is until you act.

The complete list lives with the ATO, not with any fund. It is in the super section of the ATO service in myGov, once that service is linked. It shows every account reported against your tax file number, with the balance each fund last reported, plus anything the ATO is holding for you as lost or unclaimed super.

Lost super is not a metaphor. A fund reports an account as lost when it can no longer contact you, usually after an address change nobody passed on, and small inactive balances are sent to the ATO. Both show in the same place, and both are yours to claim.

What the ATO view will not show you is the detail that decides whether closing an account is a good idea. The balance figure it displays comes from the fund’s last report and can be months old, and there is nothing there about insurance, investment options or transfer costs. That information sits with the fund, on your annual statement or in a phone call.

Rolling a balance out closes the account it came from. Everything attached to that account closes with it, and the order of operations is the whole game, because a transfer cannot be reversed once the account has closed.

For each account, the details that matter:

• What insurance it holds, what it costs, and whether the cover is automatic or was underwritten when you joined. This is the check that cannot be undone.
• Whether the cover would be replaceable. Default cover in a new fund is not the same policy, and cover you apply for later depends on your age, health and occupation at that time.
• Any buy-sell spread that applies when money leaves the investment option. Exit fees were banned in 2019, but this cost is built into the unit price and still applies.
• Whether an employer is still paying into it. A contribution arriving after the account closes has to be chased, which is slower than redirecting the payments first.
• Anything that is only available inside that fund, such as a defined benefit arrangement or an insurance policy with terms a new fund will not offer.
• The tax file number on each account. A fund without your TFN can be taxing contributions at a higher rate, whatever happens to the account.

Cover can also lapse without anyone closing anything. Where an account receives no contributions for 16 months, insurance inside it is cancelled unless the member has told the fund in writing to keep it. So the cover attached to an old account may already be gone, and the fund can confirm either way.

A rollover is a transfer between funds, not a withdrawal. The money never leaves the superannuation system, so nothing is paid to you and nothing is taxed as income on the way through.

The mechanics are short:

1. One account is the one the balance goes into, and it becomes the account contributions continue to.
2. The transfer starts in the super section of ATO online through myGov, or the receiving fund can arrange it. Either route works and the funds talk to each other electronically.
3. The request names the account to transfer from and the account to transfer to, and whether the whole balance is moving. Most rollovers move the full amount and close the account behind them.
4. The funds then process it. Funds are generally required to complete an electronic rollover within three business days of receiving the request with everything they need, though a fund with unusual assets can take longer.
5. The deposit appears in the receiving account, and the old account should close rather than sit at a nil balance with fees still attached.

Not everything has to move at once. Some funds allow a partial rollover, which leaves the original account open, and there are situations where that is the point: it keeps an insurance policy alive while the bulk of the balance sits elsewhere. The account keeps charging its administration fee, so it is a deliberate trade rather than a free option, and not every fund offers it.

Four things that do not happen on their own:

• The employer’s payroll. It pays into whichever fund is named on the ATO’s standard choice form. Contributions keep going to the old fund until payroll is updated, and a payment into a closed account has to be traced.
• The stapled fund. Since November 2021 the account you hold follows you to a new employer when you do not choose one, so the account you keep is the one that follows you.
• The beneficiary nomination. A death benefit nomination applies to the account it was made on, so it does not travel with the money and the old one closes with the old account.
• The insurance in the account kept, now that it is the only cover held: the amount, the type and whether it is still being deducted.

One account is simpler to track and carries one set of fees rather than several, which is the argument people usually have in mind. It is not automatically the right answer for everyone: a second account can exist to hold insurance that would be expensive or impossible to replace, or a defined benefit entitlement that has no equivalent elsewhere. What the fee arithmetic does say clearly is that an account nobody has looked at in four years can be costing far more than its published fee.

Once the accounts are combined, the question that remains is whether the fund you kept is the one you want the next thirty years of contributions going into. That is a comparison of fees, published returns and what each product actually offers, and it is a separate exercise from the housekeeping above.