Workers urged to consolidate super accounts

Most workers don’t realise that switching jobs can wipe thousands from their super accounts.

Australia has one of the most mobile labour forces in the world, with workers on average staying only a little over three years in their jobs.

Local workers are also mobile in the sense that they are more likely to work across many industries in their working lives.

While our adaptability might be a national trait that employers in other countries observe with envy, it has also spawned a big problem.

Our tendency to change jobs regularly means that many of us – 6.3 million to be exact – have multiple superannuation accounts.

When we leave a job we often forget to transfer our superannuation cash to a preferred account.

For thousands of people it means they have to pay administration and insurance fees on many accounts, thereby eroding – unnecessarily – the aggregate balance of their super accounts.

If super members in this situation take no action, it can wipe tens of thousands of dollars from their super entitlement when they retire.

ATO launches public campaign

The latest audit by the Australian Taxation Office found that one individual last year consolidated 17 accounts.

That might sound amazing, but ATO records show that there are thousands of people out there with more than 20 accounts.

Potentially, the worker with 17 accounts had been paying administration, investment and insurance fees on each of the accounts.

If that were the case, the person’s retirement income would have been stunted by years of neglect as they shifted jobs.

Unless you are engaged with your super, you can be opening a new superannuation account every time you change jobs and exposing yourself to multiple fees and charges.

There is a clear lesson to be drawn from such extreme cases: it pays all super members to make sure their savings are consolidated into one account.

The ATO has launched a new campaign to encourage workers to consolidate in the hope that millions of dollars of retirement savings is not wasted each year on meaningless activity by super funds.

Official data shows that more than one million Australians still have three or more superannuation accounts.

Young people could have multiple accounts

ATO Assistant Commissioner of Superannuation John Shepherd says young workers are not always as engaged with their super, but don’t realise they could be wasting thousands of dollars of their own money over time.

“Young people are often mobile in the workforce and it’s not uncommon to open a new account when they start a new job, started instead of taking their preferred fund account with them,” Mr Shepherd said.

“They might also have super accounts which they have lost track of, for example, they may not have updated their contact details with their funds when they moved house – there are still $5.8 billion worth of accounts in this category.”

Data published last year by the Department of Employment shows that people under 25 spend on average only one year and eight months in a job.

Workers aged between 25 and 35 change jobs every three years, while those over 45 tend to stay in jobs for seven years.

This means younger workers are more prone to opening multiple super accounts, in which the balances can be eroded very quickly.

 

You can read the full New Daily article by George Lekakis here.

This content was provided by the New Daily. The views expressed are not necessarily those of First Super.