Super investing: How to change your investment option

For more information on assessing investment performance, see SuperGuide articles:

• Understanding the dynamics on which your super fund invests
• Super investing: What is your risk profile?
• Super investing: Should you change your investment option?
• Does your super fund disclose what you are investing in?
• Annual super fund performance Reckoner: Annual returns for 5 investment categories
• Super investing: How to change your investment option
• How to review your super fund
• The 10/30/60 rule: What it is, and how it can help your retirement plans

If you decide to switch investment options, the process is reasonably easy. We explain the process later in this article, but before you do switch, we suggest you find out the answer to the six questions below.

Six questions to ask before switching investment options

Every super fund has different rules, so check carefully before switching.

1. How often can you change investment options?

Many super funds allow unlimited switches (or at least one switch each day), while others only allow one switch each week. Super funds also monitor investment options for abnormal transactions and can delay, limit or reject a switch request if a super fund believes a member is seeking to make short-term gains, or if the investment switch could have an adverse impact on other members.

2. What are the costs (if any) of switching?

Typically, you can expect there will be no administration fee when makinge an investment switch, but you may incur transaction costs (buy/sell costs) moving between some investment options (particularly shares). (For more information about buy/sell costs, see SuperGuide article, Super fees: What are buy/sell spread costs?.) If your investment option includes term deposits, there may be early withdrawal penalties when switching.

3. How is the investment return calculated when switching?

When you switch, investment returns from your old investment option are added to the balance in your new investment option. Before switching, it is worth checking how this return amount is calculated. Some super funds use the daily crediting rate from the day you switch, while others use an exit unit price calculated daily or weekly. For more information on crediting rates and unit pricing, see SuperGuide articles Super investing: What is unit pricing and a crediting rate? and Super fees: What are buy/sell spread costs?.

4. When is the switch request processed?

Switching requests are usually actioned at close of business on the day the request is made, but some super funds only action them once a week. There is usually a daily cut-off time (usually 3pm or 4pm) for next-day switching requests. If your request is received prior to the deadline, the switch takes effect the following day. Requests to change the investment option for a pension account may take longer.

5. Can you change your mind?

Many super funds allow you to change a pending switch request. If you submit a second request, this usually overrides the first one, but you will need to check your super fund’s rules. Once your super fund’s deadline for changing a switch request passes, usually it’s not possible to action your revised switch request. A new, separate switching request would then to be made to your super fund.

6. Will you be notified when the switch is made?

Your online account will usually show your new investment option the day after your request is actioned. Super funds usually confirm your switching request by mail.

How to switch investment options

Once you decide you want to change your investment option, it’s a fairly straightforward process. You can:

• Do it online. Login to your online super fund account (you may need to register first) and follow the prompts.
• Fill in a special form and mail it to your super fund. Print off a member investment choice or investment switch form from the super fund’s website or use the one in your member handbook or investment choice guide.
• Use an app. Register with your super fund to download an app for your iPhone, iPad or Android phone so you can monitor your account and make investment changes.

Decide how much super moves into the new investment option

When switching investment options you usually have flexibility in how much of your super account is invested in the new option. You can potentially allocate part, or all, of your super to the new option in the following ways:

• Total account balance and future super contributions
• Current account balance only: All the money in your account right now
• Part of the current balance: A percentage or dollar amount
• Future contributions only: Contributions by your employer, rollovers or personal contributions
• Pension payment option: If you have a retirement income account, you can change the investment option within your pension account

This flexibility allows you to create a tailored portfolio. You can:

• put your total account balance and all future contributions in one option;
• leave your current account balance in one option and direct all future contributions into another option; or
• put some of your current account balance and future contributions into another option.

WARNING: Changing your investment option can have significant implications, so it may be worth talking to your fund’s financial advice team, or a financial adviser, before making a switch. For more information about financial advice, including your fund’s financial advice team (or intra-fund advice), see the following SuperGuide articles:

• How to find low cost (or free) financial advice
• What are the different types of financial advice available?
• Super advice: How to find a suitable financial adviser