Did you start working at a young age? Didn’t know about superannuation or tax? The Australian Taxation Office (ATO) is continuing to urge young working Australians to consolidate their multiple superannuation accounts in order to avoid wasting thousands of fees every year.
According to the ATO, 45% of working Australians aged between 18 and 35 still have more than one super account and there is also millions of dollars’ worth of superannuation funds that go unclaimed every year. Australian Prudential Regulation Authority (APRA) figures show the median fees and charges paid for a low-cost super account to be $532 per year. By having multiple superannuation accounts young people may not realise that they’re wasting thousands of dollars of their own money due to the fees superannuation accounts charge.
Young people are often quite mobile in the workforce and it’s not uncommon for them to open a new account whenever they start a new job instead of taking their preferred fund with them. This issue was even more prevalent prior to the introduction of Choice of Superannuation legislation from 1 July 2005 which allows the employee to choose the fund employer contributions are made into. Prior to this date, employers were not obliged to offer their employees a choice of superannuation fund, which often resulted in employers establishing a new superannuation fund account as each new employee started.
As a result, people may have lost track of super accounts previous employers had set up or not have update their contact details when they’ve moved. There is still $5.8 billion worth of accounts in the lost super category. There has been a recent release of a website that helps you find your missing super. Since this website has been launched there has been a significant increase in Australians merging their super into one preferred account, with more than 265,000 accounts with balances totalling $1.13 billion consolidated in the six months to December 2014. In one case an individual consolidated 17 different superannuation accounts.
This is a rise of 400% from the six months to December 2013 when 52,000 accounts worth more than $270 million were consolidated.
If you think you have multiple superannuation accounts there are many websites that have the ability to find any lost super with the input of a few small details.
Before consolidating your accounts you should consider any insurance cover your account may hold since it will be cancelled once the account is closed. We also recommend you seek advice to determine which Fund your superannuation benefit should be consolidated into. Super funds should always have your tax file number; they’ll pay less tax on their super and it will help to ensure that your super accounts are displayed properly online.
If you require any assistance or need advice in regards to your superannuation funds please contact Grange Business Partners today – we are here to help!