‘It’s really important that Australians check on their accounts before it’s too late,’ says super boss.
Australians with multiple super accounts should consider consolidating their accounts or risk losing potential earnings, ahead of new superannuation changes coming into effect on 31 October.
The Federal Government’s Protecting Your Super changes come into effect on 31 October. On this day, all inactive, low-balance super accounts under $6000 will be automatically transferred to the Australian Tax Office (ATO). The ATO will then try to reconnect the savings from these accounts with people’s current accounts.
“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,” said Industry Super chief Bernie Dean.
The aim of the changes may result in people being reconnected with forgotten super accounts, which should stop the erosion of super balances by multiple fees and premiums. However, if the ATO is unable to match the old inactive accounts to a current account, some people risk losing investment returns.
“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,” said Mr Dean.
Forgotten super accounts that can’t be matched to active accounts will sit with the ATO, earning interest at CPI – 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,” stated Industry Super in a press release.
Research shows that one in four Australians are unaware that they have multiple accounts, making it critical for Australians to check and see if they could be affected by these changes.
“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,” said Mr Dean.
Accounts that haven’t received a contribution in the past 16 months are considered inactive. To prevent an inactive super account being automatically transferred to the ATO, Industry Super is urging Australians to contact their super fund, confirm the status of their account, and contribute to the fund they want to keep active.
People can also consolidate their low-balance or inactive accounts through the ATO’s MyGov website.
“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,” said Mr Dean.
Were you aware of the changes coming into effect on 31 October? Are your super funds set up correctly?
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