News: News Archives: What is Portability of Super?

There’s been a lot of talk about Choice of Super Fund recently and calls to our call centre show that many people are confused about the difference between Choice of Super Fund and Portability of Super.

Portability of Super came in on 1 July 2004 and, subject to certain limits, allows a member of a super fund to request that the trustee rollover his or her benefits to another fund of the member's choice. Portability is intended to allow fund members to consolidate their superannuation under one account and save on fees and charges. What’s more, it’s available to almost all employees while choice of fund is only available to some employees.

Some degree of portability has existed for many years. Whenever a person left an employer they were generally able to rollover accumulated benefits to their new employer’s fund. The Portability laws introduced last year let people transfer accumulated benefits while they are still employed by an employer. This means you can use a low fee super fund (such as Prime Super) to collect amounts from other funds and save on fees.   

To take advantage of Portability all you have to do is:

1. Request, in writing, that the trustee of the fund you want to move money out of transfers an amount to another fund.
2. The trustee might need more information from you and may even have to decline the request, but it must write back to you as soon as practicable after receiving your request.

The reasons a Trustee may have to decline your request include that it cannot move money for you unless it is satisfied you:

• Are aware you may ask the trustee for information you reasonably need to understand your benefit entitlements; and
• Do not require any more information.

Generally, the trustee of the fund you want to move money from must give effect to your request within 90 days of receiving your written request or after receiving any further information it may have requested from you. But before it can move your money it must be satisfied that:

• The fund to which you wish to move your money is a regulated superannuation fund: and
• You do not require any additional information to make an informed decision.

But there are some circumstances in which a trustee may refuse to rollover an amount, including that:

• The fund to which you have requested the rollover be sent will not accept the amount.
• The rollover would result in your balance being higher than $0 and lower than $5,000.
• The trustee has rolled over an amount for you in the past 12 months.

In rare cases a rollover can also be suspended or cancelled if:
 

• The Australian Prudential Regulation Authority believes it would have an adverse effect on the financial position of the fund or members of the fund; or
• The trustee of the fund has applied to APRA to suspend or vary the roll-over or transfer obligation because rollovers or transfers are detrimental to the fund’s financial position or the financial position of other fund members.

There are also some limited situations where portability is not allowed. These include:

• Where the fund you are rolling money out of is an unfunded public sector (government) superannuation fund, a self managed superannuation fund or some types of pension funds.
• Where the fund you are rolling money out of is Defined Benefit Fund (the benefit is calculated by a formula based on length of service and salary). 

Despite these rules, using portability to transfer your super is usually very easy; but you should always check what fees or penalties you might incur or what benefits you might lose  before making a request.

If you would like to transfer amounts from other funds into Prime Super please contact our call centre as shown below for a transfer form.

Prime Super
PO Box 2229
Wollongong
NSW 2500.
Freecall: 1800 675 839
Email:  administration@primesuper.com.au

Disclaimer
This article provides general information only and may not be relied on as legal or financial advice. 
Prime Super (Fund) is a Regulated Superannuation Fund issued by Farm Plan Pty Limited ABN 81 067 241 016, AFSL 219723. A Product Disclosure statement can be obtained from the issuer and should be considered before deciding whether to acquire, hold or dispose of an interest in the Fund.