Old-style fund may be more generous
Q My wife is 37 and has $87,000 in a GESB West State untaxed super fund for government employees and works two days a week as a midwife. She has recently ceased working for a public hospital and now works in a GP clinic and consequently is ineligible to have the superannuation guarantee paid into the GESB fund.
So, she had no other option than to open another super fund (with good advice from Money’s Best of the Best edition). These untaxed funds are not being offered to new members so we are keeping it open for now.
We can’t decide if she is better off keeping both super funds and periodically rolling into the untaxed fund but incurring double account fees. Or should we just close the GESB fund and lose the tax-free benefit but only have to pay one lot of account fees?
Hi Michael. GESB Super (Government of Western Australia) can’t give me any specific information about your wife’s fund under our privacy laws, which is quite appropriate. But it looks to me that she is in one of its older government employee funds, which are no longer available. I suspect that if this is the case you may have to pay tax if you choose to roll into another fund.
As I don’t understand the details of your wife’s fund with GESB, whether it leads to a defined benefit or a pension, or what the rules or costs in the fund are, I am pretty hamstrung. But I can tell you that the reason these old funds have all been closed to new members is that when they were established it just did not occur to anyone that life expectancy would increase so dramatically.
With much longer lives, these early, mainly government funds are, with hindsight, far too generous and unaffordable for future taxpayers, so they have been closed. So a starting point for me is that I would never take anyone out of an old government-based fund without a close look at the rules and benefits. I have no doubt that GESB would be delighted to go over the benefits of the fund your wife is in.
Your idea of having all your super in one fund is spot on but at times “old” funds are so generous you would be mad to take the money out. Make a time to meet with GESB and go over your wife’s fund, rules and benefits. I think you will find you will be leaving it where it is.