Retirees urged to check their super before October changes

‘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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    COMMENTS

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    Horace Cope
    17th Oct 2019
    12:12pm
    Why can't there be legislation to allow members to choose their own fund, regardless of where they work, which would eliminate multiple funds being used by the same worker. Not all people will work for the one employer from leaving school to retirement.
    KSS
    17th Oct 2019
    12:21pm
    You already have the right to choose your own fund or accept the one on offer from the employer. And you have the right to change at any time too (although I think it is once a year unless you have changed jobs). You also have the right to decide how much insurance you want the fund to take, whether you even have insurance in the first place, and finally how the money is invested. And yes you can do all that inside an industry fund!

    What more legislation do you want? You can't legislate for stupidity, ignorance or apathy.
    Arvo
    17th Oct 2019
    1:25pm
    I remember when I nominated a different Superannuation account to that of my employer in 2009, the employer ignored my choice and when asked why, the employer said, it was an extra administrative burden and my choice was rejected. This left a balance of funds in my Superannuation Fund of my choice without employer contributions and the balance was eaten away by annual administration fees and insurance premiums. Absolute travesty by that employer!
    VeryCaringBigBear
    17th Oct 2019
    3:10pm
    Under the law you have the right to chose your own super fund but many employers don't tell you. They also have to give you a choice of 5 funds too.
    Triss
    17th Oct 2019
    4:05pm
    And has being ill mannered and boorish made you feel better about yourself, KSS?
    Horace Cope
    17th Oct 2019
    4:24pm
    Thanks KSS, your post is not totally correct. Yes, an employee has the right to nominate a fund when commencing with an employer EXCEPT where their super fund is selected as part of the industrial award or enterprise bargaining agreement (EBA) under which they are employed. This actually covers about 30% of the workforce.
    Greg
    17th Oct 2019
    8:18pm
    Ignore what VCBB says, as usual he's got it wrong or states incorrect information on purpose.

    Not everyone has a choice like Horace Cope said.

    Also they don't have to offer five funds, if you are eligible to have a choice you can choose any fund.
    KSS
    17th Oct 2019
    8:18pm
    Do you Triss? You certainly practise enough.
    The Care Bear.
    18th Oct 2019
    8:51am
    Straight from the ATO:
    Generally, from 1 July 2005, employers must offer choice of superannuation fund to all eligible employees. To meet this obligation, employers need to identify their eligible employees; provide a Standard choice form to their eligible employees; and act on an employee's choice.