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Tougher economic conditions and turmoil in the financial markets has some Australians contemplating whether switching super funds could bolster the size of their nest egg upon retirement. 

A poll conducted by UMR Strategic Research for Industry Super Australia found that one third of industry fund members are considering switching in response to the latest market swings.

While official government statistics don’t provide insights into actual switching rates among Australians, there are a range of factors prompting us to change funds. 

For starters, the Banking Royal Commission, which concluded at the start of 2019, highlighted inefficiencies and misconduct into certain funds. 

The superannuation guarantee rate has also increased to 10.5% just as we’re facing a cost-of-living crisis in Australia, putting superannuation needs top of mind for many Australians.

Last year, the industry watchdog APRA published its inaugural list of underperforming super funds, which no doubt prompted members of those funds to make the switch.  APRA wrote to members of the low-performing funds, urging them to switch.

Furthermore, responsible investment has almost doubled in two years, according to the Responsible Investment Association of Australia (RIAA), as consumers increasingly assess their funds’ performance against their social and environmental impact.

CEO of RIAA, Simon O’Connor says there has been some active conversations and debates about divestment, especially around fossil fuels and climate risk. 

Consumers are increasingly aware of where super funds are investing their money, and they are keen to ensure it’s with ethical and sustainable companies.

“It’s hard to miss the significant step-up in the way the finance community has taken a much more responsible, ethical ownership approach to the assets and companies that they’re invested in,” O’Connor says. 

Despite withdrawing around $36 billion of our super during the pandemic under the government’s Covid-19 early release scheme, Australians have accumulated $3.3 trillion in their superannuation fund by the end of the June 2022 quarter. 

This is down 0.5% from the year prior, reflecting poorer economic conditions in local and overseas financial markets. But Australia’s superannuation system is still recognised as being one of the best in the world. 

Our retirement savings are spread between the roughly 500 super funds in Australia, including a number of smaller niche funds.

While some super fund members have switched funds in search of more sustainably minded or ‘ethical’ funds, many people appear to be waiting for the impact of the pandemic to be clearer before making the switch, executive director of SuperRatings, Kirby Rappell, says. 

Share markets fell 20-30% around the globe in March 2020, but recovered quickly, with most of these losses in super balances recovered by November 2020, he says. 

“Through our discussions with funds, we have heard of elevated levels of switching into more conservative investment options such as cash when there are falls across share markets,” he says.

This was borne out by the research by Industry Super Australia, which found that, of those who had switched finds, one in five had moved to more conservative options.

Rappell adds: “We have also heard of switching behaviour among members following the market turbulence this year; however, we’ve seen a recovery in performance over July which again emphasises the perils of trying to time the market.” 

People often put super in the too-hard basket, especially because you can’t access it until you retire. But switching super funds is a lot easier than you think, and your new super fund actually does most of the work for you.  

Once you’ve found the fund you want to switch to, all you need to do is join that fund and tell them you’d like to bring your super over from your previous fund, and they’ll handle the rest. 

You can find out and compare super funds on the Australian Taxation Office website by accessing the YourSuper comparison tool, which is an online list comparing funds. 

And while it’s not necessarily fun, make sure you read the product disclosure statement for each product offered by the fund so you know what to expect. 

Make sure all your super is in one place, because multiple accounts means multiple fees. 

Lastly, make sure you let your employer know that you’ve switched funds so they can pay your super into the right account. 

Rappell also reminds Australians that superannuation is a long-term investment and that patience remains key. 

Since 1992 when super was introduced, the typical balanced option has delivered a return of 7% per year, he points out.

“We expect to see similar muted fund-switching activity over the rest of the financial year due to the increased volatility across global markets,” Rappell says. 

“A general rule of thumb during volatile markets is that many members stop switching between super funds but do get nervous about which investment option they are in. However, over the long term, staying the course seems to have worked well for most Australians.”

Forbes Advisor has compiled a guide on how to choose the right super fund for you, which offers a complete overview of how superannuation works.

Nina Hendy is an Australian freelance business and finance journalist, regularly writing about personal finance, superannuation, building wealth, investing, saving, banking, financial markets, the economy and property. She worked for three newspapers in two states before accepting a role as a senior journalist on a business magazine. She is a beekeeper and member of her local surf lifesaving club.