If you have more than one super account you’re probably paying more in fees than you need to, and possibly having insurance premiums deducted from each of your super accounts. Paying at least double (and triple if you have 2 super accounts) in fees and insurance is not a great retirement planning strategy.
You’re not alone — around 40% of the 15 million or so Australians with a super fund account, have more than one super account. According to the ATO, as at 30 June 2017, there were 14.8 million Australians with a super account, and 40% of those Australians had more than one super account. Of these 14.8 million Australians, 25% of these Australians have two super accounts, 9% have three super accounts, and 6% have four or more super accounts.
Here’s a tip: a quick and easy way to feel instantly richer is to take the following 3 steps:
- Find out how much money you have sitting in your superannuation account.
- Locate any lost or forgotten super accounts
- Consolidate your super accounts, and potentially save thousands of dollars.
And you better be quick! The federal government, via the ATO, can now snuffle your super savings: since 1 January 2017, inactive accounts below $6,000 are transferred to the ATO.
Background: From 1 January 2016 to 31 December 2016, inactive accounts below $4,000 have been transferred to the ATO. From December 2012 until December 2015, inactive accounts below $2,000 have been transferred to the ATO, Before December 2012, the super account threshold was only $200.
Note: Since 1 July 2013, these accounts now sitting with the ATO only earn ‘interest’ equivalent to CPI increase.
If the ATO does snuffle any of your super accounts, the insurance cover you received with your super account will also disappear. For more information on the ATO transfers see SuperGuide article Lost super rules making money for the Government.
The key message is that ‘now’ is the time to find your lost super accounts and to consolidate your super accounts.
Step 1: Find out how much super you have now
Now, you can’t expect your super money to just be sitting in a money safe somewhere. The super fund that is looking about your superannuation benefits is likely to have invested that money in assets, such as shares and property, and maybe even have placed a percentage of your super benefits into a term deposit (maybe).
This is the likely scenario for most Australians with lost or forgotten super accounts: The money that you have in your super account is likely to be as a result of your employer making superannuation contributions every three months (or possibly every month), known as Superannuation Guarantee contributions. The operators (trustees) of your super fund then invest this money in assets that generate an investment return (earnings). The investment returns, after taxes and fees, are then added to your super account and the super fund re-invests those earnings hopefully generating even more investment returns.
Every year, and often twice a year (and sometimes quarterly), your super fund sends you a member statement that tells you how much money you have in your super account.
Usually, you don’t have to wait for this statement. Many super funds let you log onto a special members-only website to find out how much money you have in your super account. Many super funds update member accounts monthly, and even daily.
Remember, you may have more than one super account.
Example: Miranda’s super surprise
Miranda is 20 years of age. She works as an administrative assistant during the week, and used to work at a hardware store on Saturdays, although she finished her weekend job 12 months ago. She has two super accounts with different super funds. Miranda has a log-in and special password for the super fund associated with her full-time work. She visits the super fund’s website and finds out that she has $10,000 in her super account. Wow! Miranda flicks through her official papers at home and finds the last member statement for the super fund related to her part-time work. The statement says she has $1,100 in the account, but the member statement is dated two years earlier. She phones the super fund, and after providing member details, she is told that she has $1,250 in her second account. Lucky she contacted the second super fund because the account balance was being reviewed as inactive, and possibly transferred to the ATO. She arranges for this super account to be transferred to her current fund. Miranda is rapt: she has $11,350 in super savings, less any possible withdrawal fees.
Step 2: Find any lost or forgotten super accounts
If you change jobs regularly or you have had part-time jobs while at school or university, then it is highly likely that you have more than one super account. Note that 40% of Australians with super accounts have more than one super account.
If you have moved house in the past, have you kept track of these multiple super accounts? No? Not to worry. You have access to plenty of services to help you find your lost super accounts, and increase your super benefits instantly:
- Register for the ATO’s MyGov service, which can help you locate all super fund accounts in your name: For more information, see SuperGuide article Coping with myGov: Why the government wants you to go online. Before May 2017, you could also use the ATO’s SuperSeeker service which used to search the Lost Members Register and other ATO records, such as ATO-held super and unclaimed super money, for your lost super accounts. The SuperSeeker service is no longer available, but the MyGov service continues.
- Try AUSfund (ausfund.com.au) which looks after the lost super of millions of Australians for some of the largest super funds in Australia. If they have your super, they will find it for free.
- Ask your current super fund if they offer a service for finding your lost super.
- Ask your previous employers for the names of the super funds that received contributions on your behalf.
Example: Josh’s jackpot
Josh is 37 and he has worked in Victoria, New South Wales and Queensland. Josh has had 15 jobs during his working life, and moved houses nearly as many times. He suspects that he has at least 5 lost super accounts. He uses AUSfund, finding two super accounts. Armed with his name, date of birth and tax file number, Josh then uses the MyGov service and finds 4 more accounts, providing him with an extra $25,000 of super. He arranges via MyGov to consolidate his super accounts (see Step 3). Josh now believes he has even more super accounts that may not have been properly recorded by past employers: he plans to contact past employers.
Step 3: Consolidate your super accounts
If you have more than one super account then you are paying more than one set of fees on your retirement savings. By combining super accounts, you can potentially save tens of thousands of dollars over your working life.
- Check that the super fund that you plan to keep charges reasonable fees. Paying an additional 1% in fees over a 30-year period can reduce your final super benefit by up to 20%
- Check whether the super funds that you choose to leave charge exit fees. You may decide to wait until exit fees no longer apply.
- Obtain the ‘transfer your superannuation’ form from your selected super fund.
The consolidation process takes some time, especially collecting account details from each super fund, but a single super account and one set of fees can make life easier and lead to a larger super benefit. The ATO’s MyGov service has made the task a lot easier, and AUSfund has also streamlined the consolidation service (that is, assuming you have an account with AUSfund).