As of June last year there were 6.1 million ‘lost’ or unclaimed super accounts, with a total balance of over $5 billion, according to a recent study by SuperRatings. It’s not hard to see how this can happen — people change jobs, don’t move their super into their new fund straight away, and eventually forget about small balances they’ve left behind. Once they’ve accumulated a few accounts, it all seems like too much hard work.
So what happens to these unclaimed accounts? For a start, they could attract fees at a rate that is, according to SuperRatings Managing Director Jeff Bresnahan, “close to double that of mainstream superannuation funds”. In other words, if you’ve got an inactive super fund sitting somewhere, it’s being eaten away by high fees — plus you’re not exercising any choice about investment options, so it’s unlikely to be providing good returns. And if you’ve got several inactive funds, you’re paying several sets of account fees. That simply doesn’t make financial sense.
Your lost super could also be taken by the ATO
High fees are not the only threat to unclaimed super funds. Since the introduction of new legislation in October 2010, up to 1.5 million accounts (generally those with less than $200 in them), have been passed on to the ATO. SuperRatings estimates that the ATO received over $100 million in the first transfer of these account balances last year — that’s $100 million that Australians have missed out on.
What’s the solution?
If you don’t want your unclaimed super eroded by higher fees or taken by the ATO, the solution is simple — find and consolidate your super. While it’s true that locating and consolidating your super may take a little time, particularly if you have several accounts that you haven’t kept track of, think about the long-term benefits. You’re reclaiming your money, saving on multiple sets of fees, and putting the funds where they can start working harder for you. Surely that’s worth it?
The good news is that some of the Government’s proposed changes to super, in particular the SuperStream initiative, will make it easier to identify and consolidate super in the future. For now, the thing to do is talk to us.
SuperRatings 2010 ERF review.