How living overseas could affect your super
Many Australians will spend time overseas at some point in their life, but if you’ve booked a one-way ticket with no plans of when you’ll return, it could come at the expense of your super fund.
When you’re preoccupied with the excitement of your move, sorting out your super probably isn’t even on your list of things to do. Here’s why it should be, and what you can do to prepare your super before you leave.
What happens to your super account when you go overseas?
Your super fund operates as normal, whether you’re living in Australia or not. Which means it will still generate returns on the money already in the account and you’ll still be charged fees while you’re away. When it comes to contributions, these could change depending on who your employer is.
By law, your employer in Australia has to pay 10.5% (as at 1 July 2022) of your earnings into a super fund. If you transfer with the same company to an overseas location, but are still employed by the Australian company, these payments will most likely just carry on. Make sure to clarify this before you leave, so there’s no confusion.
If you end up working for an overseas employer, it’s likely they’ll have no legal obligation to make contributions to your Australian super fund on your behalf. But you can still voluntarily contribute part of your overseas income into your super. We’d recommend speaking to a financial advisor or your super fund before making any contributions yourself. Most funds have a direct debit or BPAY transfer option.
Will you be charged fees if you’re not in the country?
Yes. Even when you’re travelling, fees and charges associated with your super still apply. That means your account is slowly burning through its own funds to pay the fees off.
Before you go, do a review of your fund’s fees and charges and how they’re calculated (percentage or flat rate). If the numbers don’t add up, shop around and find a fund that’s more suited to your current situation.
Can you access your super for your overseas trip?
Unfortunately, you still won’t be able to access your super even if you’re travelling overseas indefinitely or on a permanent basis. As long as you’re an Australian citizen or permanent resident, super will work the same way whether you’re in Australia or abroad.
If you’re moving indefinitely or on a permanent basis to New Zealand, you might be able to transfer your super to a New Zealand KiwiSaver scheme under the Trans-Tasman retirement savings portability scheme. But you still can’t access the Australian-sourced part of your super until you’re 60 years old, and the New Zealand-sourced part until you’re 65.
How to prepare your super fund for an extended overseas trip
Before you pack your bags, there’s a few steps you can take to put your super in the strongest position possible for when you return:
- Consolidate your funds
There’s a good chance all those random jobs you had in high school were paid super into different funds, each with their own individual set of fees. It only takes a few minutes to consolidate these into one central fund. That way it’s easier to manage and you only get charged a single set of fees. You can either go through your central fund to do this or myGov. Make sure your myGov account is linked to the ATO.
- Review your insurance
Most super funds offer some form of insurance (e.g. travel, death, income, and total and permanent disability) but these premiums are paid from your super balance and often don’t cover you once you leave the country. If you know you’re going to be AWOL for a while, it might be worth reviewing your insurance to understand if your cover will still apply if your circumstances change.
- Make contributions while you’re out of the country
If you’re working and earning money, you can make voluntary super contributions as you see fit. The easiest way is to set up a direct debit or lump sum transfer from your Australian bank account to your super fund and regularly transfer foreign funds into it. There can be tax benefits when making voluntary contributions (as long as you don’t exceed the contribution cap).
These quick steps take hardly any time at all and could end up saving you thousands in the long run, making those post-holiday blues when you return a little lighter.