Benefits of consolidating services
The main benefit of consolidating super is to reduce fees.
Almost all managed superannuation funds charge two types of fee. This fee is often charged on a weekly or monthly basis and is often fixed.
When benefits are consolidated into a single fund, only one administration fee needs to be paid.
If this fee is fixed, then the fact that the balance within the fund has increased due to the consolidation will not affect the administration fee.
You stop paying the second or subsequent administration fees.
The other way consolidation can reduce fees is where the fund into which you consolidate your benefits has a lower investment fee.
For example, when you obtain a mortgage loan, your house is security for repayment.
If you have more than one fund, you are probably paying more than one administration fee.
Unsecured loans are based only on your promise to pay and are not secured by any property that can be foreclosed or repossessed to pay the loan. Unsecured loans usually have a higher interest rate because they carry more risk for the lender.