For most Australians, consolidating multiple super accounts into one is a clear financial win — it eliminates duplicate fees and makes your super easier to manage. But “consolidate everything” is not universal advice. There are specific situations where keeping multiple accounts is the right call — and rushing a consolidation without checking insurance can leave you worse off.
When Consolidation Usually Makes Sense
1. You Have Multiple Accounts From Past Jobs
Each time you changed jobs, your old employer may have opened a new default super account in a new fund. You’re now paying administration fees on each account — even on accounts you haven’t touched in years.
Multiple admin fees with no offsetting benefit is the clearest case for consolidation.
2. The Accounts Hold Small, Inactive Balances
If an old account holds a small balance (say, under $1,000–$2,000) and you’re paying $50–$120/year in administration fees on it, the fee is disproportionate. That balance will be slowly consumed by fees if left alone.
The ATO automatically transfers super accounts with balances under $6,000 that have been inactive for 16 months to the ATO as unclaimed super — this is designed to protect small balances from fee erosion, but it can be avoided by consolidating first.
3. You Have Insurance You Don’t Need in One of the Funds
If the fund you plan to close has insurance cover but you have better (or sufficient) insurance in your destination fund or through a personal policy, the insurance in the old fund is a cost with no extra benefit. In this case, consolidation removes an unnecessary insurance premium.
4. You Want to Simplify
Even if the fee savings are modest, having a single super account is easier to track, review, and manage. One set of annual statements, one log-in, one investment strategy.
When You Should Keep Multiple Accounts (or Consolidate Carefully)
1. You Have Valuable Insurance in a Fund You’re Considering Closing
This is the most important exception. Some older super accounts — particularly those opened when you were young and healthy — may carry group insurance cover at premiums that would be far more expensive (or unavailable) if you tried to obtain equivalent cover today as a personal policy.
Situations where the insurance in an old fund may be worth preserving:
- You have a health condition that has developed since you joined the fund — new personal insurance may exclude this condition or be declined entirely
- The fund’s insurance includes “own occupation” TPD cover, which is more member-favourable than “any occupation” cover
- The insurance premium is very low because you entered the fund at a young age or under favourable group terms
Check the insurance before you close any account. If you cannot replace the cover on equivalent terms, the cost of keeping the account open (admin fee) may be worthwhile.
2. Your Old Fund Is a Defined Benefit Fund
Defined benefit super is calculated by a formula — typically based on your final salary, years of membership, and a defined benefit factor — rather than by an account balance. These schemes exist mainly in government and public sector employment.
The transfer value of a defined benefit entitlement (what gets rolled into a new fund if you consolidate) is often substantially less than the value of the defined benefit entitlement itself if you wait until the benefit is paid.
Do not roll out of a defined benefit fund without understanding the difference between your defined benefit entitlement and the current transfer value. In many cases, the right answer is to leave a defined benefit entitlement in the defined benefit fund.
3. Your Employer Is Currently Contributing to an Old Fund
If your employer contributes SG payments to a fund you’re thinking of closing, ensure you notify your employer of your new fund details before (or at the time of) closing the old account. If you close the account before your employer updates their records, contributions may bounce back or be delayed.
4. You’re Thinking of Consolidating Into a Worse Fund
The goal of consolidation is to end up with your money in the best fund for your circumstances — not simply to have one account. If your existing accounts include one poor fund and one good fund, roll the poor one into the good one. Don’t pick the destination arbitrarily.
If you’re unhappy with all your existing funds, open a new account with a better fund first, then consolidate into that.
The Consolidation Decision — A Quick Reference
| Situation | Consolidate? |
|---|---|
| Multiple accounts, all paying admin fees, no special insurance | Yes — clear win |
| Small inactive balance with high relative fee | Yes — or let ATO reclaim it |
| Old account has insurance you can’t easily replace | Check carefully — may be worth keeping |
| Old account is a defined benefit | Usually no — get advice first |
| Destination fund is worse than source fund | No — choose destination carefully first |
| Employer currently contributing to old fund | Yes, but notify employer first |
How Much Does Consolidation Actually Save?
The saving depends on the admin fees in the accounts you close. A rough estimate:
- $70/year admin fee saved, over 20 years at 7% investment return = ~$2,900 in extra super at retirement (the fees that would have been deducted now compound instead)
- $120/year admin fee saved, same scenario = ~$5,000 extra at retirement
These are modest amounts, but they’re certain savings — unlike investment returns, which vary. Combined with the simplicity benefit, consolidation is usually worth doing unless one of the exceptions above applies.
Frequently Asked Questions
If I consolidate, can I undo it later? No — once a rollover is processed, it cannot be reversed. The old account is closed and the balance becomes part of your destination fund. This is why checking insurance and the destination fund’s quality before consolidating is important.
Can I consolidate super if I’m approaching retirement? Yes. Consolidation can be done at any age. Members approaching retirement often benefit from consolidation because it simplifies the management of drawdowns and makes a transition-to-retirement strategy easier to implement. Review insurance carefully if approaching retirement with existing health conditions.
Is there a tax cost to consolidating super? No. Rolling over super between complying funds is not a taxable event for the member. The transferred amount does not count as a contribution, and no tax is withheld from the transfer. Tax is applied within the fund on earnings, but this is unaffected by consolidation.
I have a small account with a balance under $6,000 — what should I do? If the account is inactive (no contributions received for 16 months), the ATO may automatically transfer it to the ATO as unclaimed super. You can proactively consolidate it via myGov, or claim it back from the ATO if it has already been transferred. See Lost Super Australia — How to Find and Claim It for how to locate ATO-held super.
For advice tailored to your situation, speak with a licensed financial adviser. You can find one through the ASIC financial advisers register or MoneySmart.