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If you’ve ever changed jobs, address or your name then chances are you could be owed a slice of the $20.8 billion in lost super across Australia.
Or perhaps you are aware you have super sitting in multiple accounts, but just never get around to sorting them out.
This is not just an administrative problem. If you have several super accounts it could mean you’re paying multiple fees, charges and insurance premiums, which may significantly reduce your overall retirement income.
Not only that, but if you’ve lost track of your super you have no way of telling if your money is invested in a good super fund or a lemon.
Whatever the reason, why leave money on the table when it’s a relatively quick and simple matter to claim what’s yours?
What is lost and unclaimed super?
Super funds must report ‘lost’ super to the Australian Tax Office (ATO) twice a year. The definition of lost includes situations where you are uncontactable at your current address and you have made no contributions or rollovers into the account for the past 12 months. Or where your account has been inactive, meaning it has received no contributions or rollovers, for five years.
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Under the Protecting Your Super laws that took effect from 1 July 2019, super funds are required to pay inactive, low-balance accounts to the Australian Taxation Office (ATO). This includes accounts that have not received any contributions for 16 months with an account balance below $6,000. The ATO will then proactively reunite any unclaimed money it holds for you into one of your active super accounts.
Unclaimed super is different to lost super and refers to super that is eligible to be withdrawn but the fund has been unable to contact you. Unclaimed super can be the super of:
- Fund members aged over 65
- Non-member spouses
- Deceased members
- Former temporary residents.
The ATO is also working proactively to find people who are entitled to unclaimed super. In one case, a woman aged 68 was reunited with over $1.5 million that was unclaimed and that she had lost contact with.
How do I find and consolidate my super accounts?
The easiest way to consolidate super accounts is through the myGov website. According to the ATO, between 1 July 2018 and 30 June 2019 more than 537,000 accounts worth $4.38 billion were consolidated or transferred by fund members using myGov.
How to find and consolidate your lost super
Time needed: 5 minutes.
- Log in or create a myGov account
You can create an account at my.gov.au
- Link your myGov account to the ATO
Learn more about how to do that here.
- Select ‘super’
If the ATO has a record of your super funds you can then find and choose to transfer your super to another account.
- Important: Check for exit fees and your insurance coverage
Exit fees have been banned since 1 July 2019 (see here), but it is worthwhile checking the super fund does not charge you. It is also important to check if you will lose any insurance coverage. Before you consolidate your super, check the details of each of your accounts to decide which fund best suits your needs and objectives. ASIC’s MoneySmart website makes this suggestion: “When consolidating your super, don’t just choose the fund with the highest balance. The best fund for you may be one of your small accounts, or a completely new fund.”
If you don’t have access to online services, you can also look for lost super by phoning the ATO directly on 13 28 65.
It also may be worth searching on AUSfund. This is a special type of super fund set up to look after money transferred from other regulated super funds because a member has become lost or inactive. More than 35 super funds transfer their members’ inactive and unclaimed accounts to AUSfund.
While AUSfund continues to invest and manage members’ money on their behalf, your savings are protected from further erosion from fees. For this reason, it may be used by people who want to park their money temporarily while they are out of work or living overseas temporarily and not receiving super contributions. However, it’s worth noting that AUSfund doesn’t provide insurance cover, accept member or employer contributions or offer investment choice.
If you still can’t find your lost super, it may be worth contacting the employer who made the super payments to see if they have any records of it. Your super fund may also be able to help you.
Once you’ve done this, make sure your super fund has your tax file number and your current address, so your super doesn’t go missing again.
Why is it important to find your lost or unclaimed super?
In a nutshell, because it’s your money. Even small amounts in a forgotten account dating back to your early 20s could grow to a substantial amount by the time you retire 40 years later.
According to the ATO, as at June 2019 there was a staggering $20.8 billion in lost or unclaimed super waiting to be claimed by ordinary Australians who may be blissfully unaware of its existence. Like the woman, aged 68, who was contacted by the ATO and reunited with over $1.5 million that she had lost touch with.
Not surprisingly, as Australia’s most populous state, New South Wales has the most number, and highest value, of lost and unclaimed super with 888,769 accounts holding over $6 billion in assets. Victoria and Queensland are not far behind, as the table below shows.
As the superannuation system matures, the average value of these lost and unclaimed accounts is also rising. The ACT had the highest average value of lost and unclaimed accounts at $9,755, followed by South Australia ($8,849) and Tasmania ($8,429).
Lost and unclaimed super by state as at 30 June 2019
|Location||Lost super accounts||Value of lost super accounts||Unclaimed super accounts||Value of unclaimed super accounts||Total number||Total valueue|
Why you should consider consolidating your super
According to the ATO, the message is getting through and the number of Australians consolidating multiple accounts has been increasing in recent years. Over 10 million Australians, or 64% of those with super, had just one account as at 30 June 2018. Even so, that left around 6 million Australians, or 36% of members, with two or more accounts.
|Number of accounts||Total individuals|
|6 or more accounts||1%|
Why does this matter? The simple answer is that multiple accounts will cost you more in fees and reduce your retirement savings.
What is the potential cost of having multiple super accounts?
While some people choose to hold more than one account, the 2018 Productivity Commission (PC) report into superannuation estimated that more than a third of all super accounts are unintended multiple accounts and these cost a total of $2.6 billion every year in fees. And that’s not counting the cost of multiple insurance premiums.
The three main types of insurance products offered through super include death cover, or life insurance, which pays a lump sum or income stream to your beneficiaries if you die.
Total and permanent disability insurance covers you if you become seriously disabled and are unlikely to work again, while income protection insurance pays an income stream if you are temporarily unable to work.
One major problem of multiple super accounts identified by the PC report is so-called ‘zombie’ insurance. These are insurances, like income protection, which can only be claimed through one policy. So if you have multiple accounts you are paying premiums for insurance that will never pay out.
The Productivity Commission report states: “The chief and costly culprit for such zombie policies is income protection, which can typically be claimed against only one policy and only when members are working. A typical full-time worker can expect insurance to erode their retirement balance by 7% ($60,000) if they have income protection cover, compared to just 4% ($35,000) if they only have life and disability cover.”
These costs are exacerbated by foregone compound returns. The Productivity Commission’s report cited the example of a worker with two accounts across their working life who will end up over 6% (or $51,000) worse off at retirement compared with a worker holding just one account.
How do people end up with multiple accounts?
As mentioned earlier, many people lose contact with their super funds when they change jobs, move house or simply forget to update their details. People also often get a new super account each time they change their job and they let their new employer choose the fund.
It appears that the trend towards members holding multiple accounts begins to kick in at a young age, between 19 and 25. At this age, many young people have multiple part-time jobs while they are studying gaining work experience.
By the time people are in their 40s, 44% have more than one account. Then, as retirement draws near and people hit their late 50s, the trend towards consolidating super accounts into a single fund takes hold.
Percent of members by number of accounts by age group
Source: ATO, Productivity Commission, 2018