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Australians urged to check their super ahead of the latest changes
AUSTRALIANS with multiple super accounts should consider consolidating their accounts or risk losing potential earnings, ahead of new superannuation changes coming into effect at the end of October, Industry Super Australia has warned.
As part of the Federal Government’s Protecting Your Super changes that come into effect on October 31st, all inactive, low-balance super accounts (under $6,000) will be automatically rolled over to the Australian Tax Office (ATO). The ATO will then try to reconnect the savings from these accounts with people’s current accounts.
“These are good changes that will put more money back into the super nest eggs of thousands of workers – but it’s important Australians are aware they could miss out on extra earnings, if their old and forgotten accounts end up sitting with the ATO," Industry Super Australia CEO Bernie Dean said.
While the changes will result in people being reconnected with money in forgotten super accounts and stop the erosion of super balances by multiple fees and premiums, people should be aware that if the ATO is unable to match the old inactive accounts to a their current accounts, they risk losing out on investment returns.
This is because the money from those old forgotten super accounts will sit with the ATO and will earn interest at CPI – which is significantly less than what a person would receive if they had their super in an industry super fund. On average, industry funds return a balance which is 4.5 per higher than CPI.
With research showing that one in four Australians are unaware that they have multiple accounts, it’s critical that Australians check to see if they could be affected by these changes.
Industry Super Australia is urging Australians to take action and consolidate their super funds themselves, ahead of the ATO’s automatic consolidation deadline, to make sure they don’t miss out on additional earnings.
“With less than a month to go before these super changes kick in, it’s really important that Australians do their housekeeping and check on their accounts before it’s too late," Mr Dean said. “Sorting it out is easy – if you have multiple accounts you can consolidate now and protect and maximise your savings, or if you’re a person who has been out of the workforce for a while you can make a contribution to keep your fund ticking over.
“If you’re not sure if you’re going to be affected by the changes, just give your super fund a call and they’ll be able to help you.”
Australians taking a break from the workforce, such as mums at home caring for kids, or those studying or overseas could also be affected if they haven’t made a contribution to their account in the past 16 months.
Under the changes, an inactive account is one that hasn’t received a contribution in the past 16 months. The best way to prevent an inactive super account being automatically transferred to the ATO is to contact your super fund, confirm the status of your account, and make a contribution to the fund you want to keep active.
For those Australians with multiple accounts, account consolidation has never been easier. People can easily consolidate their low-balance or inactive accounts through the ATO’s MyGov website or by calling their super fund to begin consolidating their accounts.
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