Did you know that as at 30 June 2017, there were more than 6.2 million lost superannuation accounts and the Australian Taxation Office held super accounts to a total value of $17.5 billion?
That is a lot of money that could be better utilised to grow your wealth or to pass on to your family.
The accounts held by the ATO are those which have been transferred there because the relevant super funds have lost track of the account holders.
How does super become lost?
More and more Australians are better educated about how their superannuation can significantly improve their finances in retirement, which means they are being more diligent with their accounts.
That said, it is still relative common for super funds to lose track of account holders because they have moved houses, changed jobs or have failed to keep their super fund details up-to-date.
Also, most people who are now middle-aged have had superannuation their entire working lives, including when they first started out.
That usually means that they may have several accounts left over from their early days, which they have probably forgotten about.
This is also a common problem with people who have had various part-time jobs with their super contributions going to different funds.
In fact, according to the ATO, 15 per cent of individuals had more than three superannuation accounts in the year ending June 2017, which is actually a reduction from 19 per cent four years before but still too many for my liking.
Why one account is enough
Nearly 40 per cent of Australians continue to have more than one superannuation account.
However, having more than one super account doesn’t mean you can make double the returns!
Why is that?
Well, most of the time, one of those accounts could be lost or inactive, so while it might have funds in there, there aren’t any regular contributions going in to make up for the outgoings.
There could also be insurances being paid for out of the super fund which may not be needed.
Although legislation is being put in place regarding inappropriate life insurance this may not remedy all circumstances.
Super funds charge a variety of fees for administration but also for insurance premiums for policies other than life insurance, such as income protection, which again may not be appropriate or needed.
The problem, therefore, is that if you have one inactive fund or even multiple active funds you are still paying premiums and other fees which drains the funds in your account.
Plus, having two insurance policies with two different funds doesn’t mean you can automatically draw on both in the event of death or accident.
Insurance payouts will normally require an assessment at claim time and there are many instances or situations where a policy will not be paid out based on the answers given at the time of claim.
It just means you are potentially paying double what you should be.
By consolidating your superannuation into one fund, you not only reduce these unnecessary costs, you also make the most of having a higher balance which you can grow through the fund’s various investments on your behalf.
How to find your lost super
- see details of all your super accounts, including any you may have lost or forgotten about.
- find ATO-held super, held on your behalf when your super fund, your employer or the government couldn’t find an account to deposit your super to.
- After appropriate and specific advice consolidate your super into a single fund.