How many superannuation accounts have you got that you know about… and how many have slipped your attention?
Around 15 million Australians now have super fund accounts with approximately 40% of them have more than one!1
Statistics collected by the ATO show that if you’re aged 26 – 60 you’re more likely than others to have more than one account. Incredibly, 22% of people aged 41 – 45 are likely to have three or more accounts!
So, what’s wrong with that?
Plenty! For starters, the more accounts you have, the more likely you are to forget about one or more of them, which means you could lose track of some of your hard earned super.
Secondly, one account will reduce your paperwork and will help minimise the amount you spend having your annual accounts done.
Thirdly, the more accounts you have the more you’ll pay in fees. According to Choice, Australia’s superannuation fund management fees are among the highest in the world – so paying fees on multiple accounts will reduce your return and could even deplete your account altogether if the balance is small. Choice claims that paying just 1% more in super management fees each year can reduce the value of your super account by roughly 20% over 30 years.2
Small balances from short-term jobs may even disappear over time because of the fees you pay.
So, what should you do?
First of all, find out how many super accounts you have – you can do this by creating an account through myGovExternal Link.
Then, consolidate them into one.
Next, whenever you have a contractual arrangement that requires your contractor to pay you super, ask your contractor to pay contributions into your super account.
How can I consolidate my funds?
This is usually an easy process, however before you make any decisions, check the details of each fund you have, so you can decide which one is best for you.
Also, check for
- are any exit fees
- whether you currently have insurance through the fund
- whether changing will affect how much your employer contributes.
- 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.
And before you choose which super fund to put all of your money into, be sure to compare the fees that will be changed, assess which fund will return the most based on your consolidated super savings. Also, be sure to talk to potential account managers about whether you need insurance inside your super and how that will impact premiums.
You’ll find some helpful information about how to compare different accounts here.
Don’t lose out
According to the ATO, as at 30 June 2017, there were a total of over 6.3 million ‘lost and ATO-held accounts’ with a total value of just under $18 billion!
Lost uncontactable and lost inactive accounts are still held by super funds, whereas unclaimed super money (USM) and superannuation holding accounts (SHA) are held by the ATO… don’t forget to check on any super savings you may have lost in the past by creating a myGovExternal Link account and linking it to the ATO.
Protect your future
Ayers has experts in payroll who can help you manage your income, tax and superannuation obligations. Call us today – we’ll make sure you have your finances in order, so you can maximise your wealth and be free to build your business.