Superannuation
funds deducting huge fees on millions of lost super accounts
Millions
of Australians are being ripped off by their super funds and they
don't even know it, a Treasury analysis reveals.
19
October, 2012
The
nation’s $18 billion pot of lost superannuation savings is being
raided by funds deducting hundreds of dollars in unnecessary fees and
charges that, in some cases, will drain accounts dry in just a few
years.
As
the federal government prepares to gradually increase the rate of
compulsory superannuation from 9 per cent to 12 per cent, beginning
next July, the superannuation minister, Bill Shorten, is understood
to be looking at ways to safeguard the money in these lost accounts.
The
Treasury analysis, obtained by News Limited, reveals a person aged 30
who has lost track of an account containing just $1000 is having an
average of $169 a year deducted in insurance premiums alone. At that
pace, the lost account would be drained dry in less than six years.
In
one instance, Treasury found a fund deducting as much as $312 a year
in insurance premiums.
The
head of research at information firm Rainmaker, Alex Dunnin, said
most Australians would be unaware they even had lost super, let alone
that it came with insurance cover for death or disability.
“If
you have a lost account you have no idea what’s happening to it.
The key question is after how long should a fund keep deducting
premiums if the member is not making contributions?”
Mr
Dunnin said super funds had little incentive to hunt down lost
members: “A big lost account is a good money spinner for a less
than scrupulous fund.”
A
super account is deemed “lost” when a super fund reports it to
the Tax Office as inactive - receiving no contributions - for five
years or the account holder is uncontactable.
Treasury
figures show that there are about 3.6 million such accounts
containing $17.68 billion in super. Of this, $16.8 billion is held by
super funds and $881 million at the Tax Office, which looks after
lost super accounts with balances less than $200.
The
chairwoman of consumer group Choice, Jenni Mack, said young
Australians, low income earners and women were most at risk of having
lost super accounts because they did multiple part-time or casual
jobs with different employers.
“It’s
a huge problem. People’s superannuation is part of your wage
package. It’s money that you’re entitled to and for too long too
many fees have been eroding people’s balances.”
Ms
Mack encouraged people to go to the Tax Office’s website and enter
their tax file number into the SuperSeeker tool
to see if they have any lost super accounts
Superannuation is your money and is the part of your wage package.A super account for five years.
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