Are you losing money by having more than one super fund?
Did you know that around four million Australians hold two or more super accounts?1 That means we’re collectively paying around $690 million annually in excess administration fees, and $1.9 billion a year in excess insurance premiums as a direct result of having more than one super account.2
5 minute read
There are a few reasons why you might have more than one super account.
- Perhaps you’ve changed your name or address and lost contact with your super fund.
- It could be that you’ve changed jobs a couple of times or you didn’t give your super account details to your new employer and they simply created an account with a super fund they have an existing relationship with. It’s good to know that most employees can choose the fund their employer pays their contributions into.
- You may have used the consolidation tool in Member Online to check if you had accounts elsewhere but it reported a zero balance. Australian Tax Office (ATO) records are usually updated each October with 30 June balances, so a $0 search result may not mean your other account is empty, it’s just that the actual current balance isn’t shown.
While there are a number of reasons why you might have multiple super accounts, there are also a number of reasons why people don’t combine their known accounts into the one fund. Some of these reasons include:
- Your other super account may have a high balance and you’re not sure which super fund to stick with. As a starting point, it’s always a good idea to do your research and make a choice that’s in your best interest.
- You’re not sure you’re qualified to make such an important decision. Helping you feel empowered to take charge of your finances is part of our job. You can access articles and tools through our LearnHub, or you can call us on 13 11 84 and we can talk you through it.
- You’re worried about keeping all your money in one place, so you hold on to more than one account to hedge your bets in case something goes wrong. A fund collapsing and losing all your money is an unlikely outcome. Ultimately, your super is better together. Sunsuper is one of Australia’s largest and most awarded super funds. And, being a profit-for-members fund, you can feel reassured knowing we're working in your best interests, not someone else's.
- You have decision fatigue. We get it! Making decisions is hard, especially important decisions that’ll have a big impact on your future. Take some time to have a think, but don’t wait too long – otherwise you risk some of your funds being rolled out to the ATO as lost or unclaimed super, or multiple fees eroding the overall balance of your accounts.
You’re probably losing money
Having more than one super account could hurt your retirement plans. Here’s why:
- It’s likely you’re paying fees for each of the accounts you hold. Some fees are calculated according to your balance, but most funds also charge a flat fee – and if you have more than one account, you’re paying those flat fees multiple times.
- If you aren’t making regular contributions into every single one of your super accounts, you could be at risk of the ‘inactive’ accounts being rolled out to the Australian Tax Office (ATO) as part of the Protecting Your Super Package (PYSP)3 legislation changes. From 1 July 2019, Super-savings accounts with a balance under $6,000 will generally be transferred to the ATO unless the member has in the previous 16 months:
- You might be paying for more than one insurance plan. This means you could be paying more for the combined total value of the plans than if you stick to the one insurance plan.
- Your insurance may be cancelled on your Sunsuper account (as well as your other super fund accounts if they don’t meet the necessary requirements to maintain insurance). From 1 July 2019, if your account has not received an eligible contribution4 for 12 months or more, any insurance associated with your account will be cancelled.
a. Received a contribution, rollover or automatic transfer from another fund,
b. Made an investment choice,
c. Changed their insurance cover,
d. Made or amended a binding beneficiary nomination, or
e. Provided written notice to the ATO or to Sunsuper that they do not wish for their Sunsuper account to be transferred.
Being rolled out to the ATO means that you won’t be charged multiple fees anymore (protecting your balance from being eroded by unnecessary fees), but it also means you won’t be getting any investment returns, either.
Benefits of consolidating
Consolidating your other accounts is an important step in growing your long-term savings. It means you stop paying extra, unnecessary fees and enables you to feel on top of your super with only one account to manage.
Before consolidating, consider the potential loss of insurance and other benefits with closure of the super account with the other fund and also consider where your future employer super contributions will be paid.
Why choose Sunsuper?
There may be reasons for having more than one super account, but in general multiple super accounts could mean multiple fees, more paperwork and more of a chance of losing track of your money. That’s why consolidating your super into one account can be a smart choice. Not only could you be reunited with your lost and unclaimed super, but combining multiple accounts can be an important step in growing your long-term super savings.
We’re a fund that works for you, not shareholders. So your dreams aren’t a promise. They’re our purpose. As a members-first fund, we return profits to our members as better services and lower fees.
With a proven record of strong performance, our returns that have beaten the industry average over 1, 3, 5, 7 and 10 years.5
How to consolidate your super funds
Consolidating your super is easy with Sunsuper. In just a few steps you can combine your super online using our member portal, Member Online. Login to get started. 6
1 Source: ATO Lost and unclaimed super as at 30 June 2020.
2 Productivity Commission 2018, Superannuation: Assessing Efficiency and Competitiveness, Report no. 91, Canberra.
3 The Protecting your Superannuation legislation establishes a maximum period of 16 months. As permitted by law, Sunsuper has set an inactivity period of 12 months of not receiving an eligible contribution, to better protect our members’ balances from being eroded by insurance premiums.
4 Eligible contributions include Superannuation Guarantee, additional Employer contributions, personal contributions (including voluntary contributions and contributions made by a spouse), rollovers and automatic transfers from other funds. They do not include co-contributions or the low-income super tax offset.
5 SuperRatings Fund Crediting Rate Survey - SR50 Balanced (60-76) Index, March 2021. Past performance is not a reliable indicator of future performance.
6 Before consolidating your super, consider the potential loss of insurance and other benefits that you may have with your existing fund. Also, think about where your future employer contributions will be paid.