INDUSTRY super funds have announced a new initiative to take the legwork out of consolidating multiple accounts to save eligible members an average $260 a year in fees and insurance premiums.
So far, 18 industry super funds covering over half the workforce are cooperating in a collective cross-fund matching initiative that will be free of charge to members if a successful match is found.
In its first full scale deployment, the matching initiative seeks to automatically consolidate 500,000 low balance inactive accounts.
Successfully consolidating all these accounts could collectively save members an estimated $100 million a year in duplicate fees and insurance premiums.
Industry Super Australia chief executive, Bernie Dean, said industry super funds had been designing and testing the sophisticated cross-matching scheme for over a year.
“The initiative follows a successful 2017 pilot led by Industry Funds Services and nine industry funds which consolidated 50,000 accounts,” said Mr Dean.
“It has been developed to cut through restrictive rules which limit the ability of funds to reunite members’ lost and inactive savings without first obtaining express consent.
“Once a match is found members will still be able to opt out, but a survey following the pilot found members who had accounts consolidated were very happy funds proactively chased their savings.
“This is the right thing to do for members – they expect the system to sort out multiple accounts for them," Mr Dean said.
“Industry super funds have been consolidating multiple accounts for many years but it has relied on members kicking it off. This new initiative will cut through the red tape,” he said.
“Consolidating the accounts will reduce duplicate charges and help members build their super savings faster,” Mr Dean said.
According to Productivity Commission estimates, eliminating multiple accounts could save a member $51,000 over his or her entire working life.
Industry Super Funds’ cross-matching initiative:
- · Eligible inactive accounts with balances under $6,000 will enter a collective pool to be matched to the active account held by participating funds.
- · There will be no charge to members associated with the matching of a superannuation account and no exit fees for duplicate accounts closed as accounts are consolidated.
- · Industry Super-owned AUSfund – an Eligible Rollover Fund – will be used to match and consolidate members’ inactive accounts to an active account held in a participating industry super fund.
- · Any inactive accounts sent to AUSFund but not consolidated in the initial wave of matching will attract investment returns net of a low annual administration fee of $11.50 and 0.53 percent indirect costs until consolidated in subsequent matching waves.
- · Where required, funds will inform members of their fund’s participation in the cross fund matching exercise through disclosures, including the annual member statements.