Being a member of several superannuation funds may not necessarily be as much of a hindrance to justify implementing an automatic consolidation scheme as recommended in the Stronger Super proposals, according to a senior financial services executive.
“Personally I’m a member of three funds and for good reason. One’s a public service fund, which is like gold because it’s a defined benefit fund, and I am running different types of portfolios in the other two funds,” OnePath head of technical services Graeme Colley said.
“I do that on purpose and if I’ve got a good reason for doing it, I don’t want auto-consolidation to come in.”
Under the proposed regulations, members who have multiple accounts within one superannuation fund with existing commonality of tax file numbers will have these accounts automatically rolled into one.
The issue is currently still being considered in consultation with the superannuation industry.
Colley said insurance cover was another situation where people might choose to have multiple accounts.
He drew upon the example of a person who starts a self-managed superannuation fund (SMSF) potentially wanting to leave a balance in a retail fund due to the group cover provided by that fund that the individual could still benefit from.
“So if you’re thinking of rolling your balance over into an SMSF, think twice because the group cover you have within one fund may no longer be available and depending on your age, in some cases you may find that you are no longer insurable,” he said.
“So while your group cover would still be current, moving over to the SMSF and going through the same underwriting process and changes in lifestyle and issues like that may prohibit you from being insured.”
