Suite 8 / 260 Auburn Road, Hawthorn 3122
Phone: 03 9214 4100
Fax: 03 9818 6008
enquiries@trumpetfinancial.com.au
 
 
eWombat Search
  LATEST FINANCIAL NEWS
 
Hot Issues
Retiree self-protection: A volatility-and-downturn 'bucket'
How financial advice helps create wealth.
Superannuation gender gap narrowing, research shows
All the stats you need to see how Australia is going.
Market downturns, like this one, are to be expected
ATO claws back $850m in unpaid SG in FY 17-18
‘Hefty penalties’ with TRIS payment failures, SMSFs warned
The global financial crisis: Behind us but far from over
'Huge' professional risk in SG delays, big four firm warns
What a financial adviser can add to your portfolio's returns.
ATO updates crypto guidance
Reverse mortgages: Short-term gain, long-term pain
ATO set sights on 27,000 funds in ongoing crackdown
ATO zones in on hundreds of newly created reserves
A dynamic approach to retiree spending and drawdowns
Your investment freedom-maker
Living expenses for retirees on the rise
Still a long and bumpy road to travel on the way to a U.S.-China deal
Smart spouse investing
How financial advice helps create wealth.
What the ATO will be keeping an eye on in FY19
Examining the S in SMSF
Trade tensions to choke global growth: Moody’s
Tools for budgeting, cash flow, Super and more ….
Statistics show SMSFs not just for the rich
SMSFs lose thousands in property, investment scams
Articles archive
Quarter 3 July - September 2018
Quarter 2 April - June 2018
Quarter 1 January - March 2018
Quarter 4 October - December 2017
Quarter 3 July - September 2017
Quarter 2 April - June 2017
Quarter 1 January - March 2017
Quarter 4 October - December 2016
Quarter 3 July - September 2016
Quarter 2 April - June 2016
Quarter 1 January - March 2016
Quarter 4 October - December 2015
Quarter 3 July - September 2015
Quarter 2 April - June 2015
Quarter 1 January - March 2015
Quarter 4 October - December 2014
Millions of multiple super accounts erode savings

One of the simplest ways to make your retirement savings more efficient and less costly is to get rid of needless multiple super accounts.



       


 


The vast majority of super fund members with multiple accounts unnecessarily pay multiple sets of fund administration fees and insurance premiums. These extra costs compound over time to eat away at retirement savings.


Further, members with multiple super accounts may have difficulty keeping track of how their retirement savings are invested, their asset allocations, and whether their returns are satisfactory. This can lead to sacrificing returns year after year in a poorly performing fund. Lost super accounts can often mean lost returns.


Yet many of us have more super accounts than credit cards. It may seem hard to believe but some individuals are members of six or more super funds.


Of 14.8 million Australians who were members of a super fund at June 2017, the tax office reports that 40 per cent had more than one super account. More than 28 million super accounts exist – almost double the number of Australians with super.


And 6.3 million super accounts with a total value of almost $18 billion were classified as "lost" or "inactive". These accounts are held by the tax office (earning interest) or by super funds, depending upon the circumstances.


While 60 per cent of fund members held one account, 25 per cent had two super accounts. One per cent (63,000 members) had six or more.


This tax office data suggests that many young members begin collecting multiple fund memberships shortly after first joining the workforce, often working in a succession of part-time or full-time jobs. A common trap is to join a new default super fund whenever taking a new job.


Those working in the gig society and holding a portfolio of part-time jobs would often have multiple super accounts.


The numbers of members with multiple accounts tends to markedly increase as members move from job to job during their typically long careers, peaking at 48.17 per cent of members in the 41 to 45 age group. Having three or more super accounts is not uncommon, mostly for members in their mid-careers.


Fortunately, the proportion of members with more than one accounts begins to reduce as they enter their fifties, falling to one third of members age 61-65 and down to under 18 per cent of members age 66 or more.


As actuaries and consultants Rice Warner point out in a recent commentary, some individuals have a need for two super accounts – typically for insurance coverage or because they are unable to combine a defined benefit account with an accumulation account. But this would not explain why millions of multiple accounts exist.


Certainly, the consolidation of your multiple super accounts is unlikely to dramatically improve your super savings. Yet as Rice Warner comments: "Recovering lost super can improve retirement savings bit by bit".


The tax office's website has a useful feature, Keeping track of your super, which includes a useful video about how to find your multiple super accounts and how to get rid of excess accounts using the MyGov website. ASIC's consumer website MoneySmart also useful tips in an article, Consolidating super funds.


 


Written by Robin Bowerman
Head of Market Strategy and Communications at Vanguard.
09 March 2018
vanguardinvestments.com.au




3rd-April-2018
Trumpet Financial Pty Ltd ABN 11 443 516 384 Corporate Authorised Representative (No 327756) of Aon Hewitt Financial Advice Limited AFSL 239183 ABN 13 091 225 642
Registered Address: Level 33  201 Kent Street, Sydney NSW 2000 | Sitemap | Disclaimer | Privacy Policy | About Aon Hewitt Positioning