Australians have until the end of October to consolidate their superannuation or risk losing potential future earnings.
As of October 31, all inactive, low-balance superannuation accounts with less than $6,000 will be rolled over to the Australian Tax Office (ATO), with the intent that ATO will then attempt to reconnect these savings with Australians’ other accounts.
But if the ATO is unable to match the old accounts to the new, it will hold onto the accounts where they will earn interest benchmarked with the Consumer Price Index (CPI), which is 1.6 percent. That’s significantly lower than super fund average return data.
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.
The government’s plan is designed to stop people with multiple accounts being charged unnecessary fees and insurance charges. These moves are expected to save Australians $2.6 billion in fees, which is good, and in theory will put more money back into the super nest eggs of thousands of workers – but it’s important people are aware they could miss out on extra earnings, if their old and forgotten accounts end up sitting with the ATO.
Data released by the ATO reveals the total amount of lost and unclaimed super was reduced by over $420 million in 2017-18 but there is still some $17.5 billion spread across more than 6 million accounts waiting to be found.
It’s estimated that more than a third of Australians still hold two or more super accounts. While some people intentionally maintain multiple accounts, a lot of people are unaware of this.
How do I protect my super?
You can view all your super account details, including any that you have lost or forgotten, by linking your myGov account to ATO online services.
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.
Its important to note that many super funds hold an amount of insurance cover, and fund consolidation can have implications for this, so if you think you have lost superannuation, a fund that falls into the low-balance inactive category, or if you’re not sure if you’re going to be affected by the changes, just give our office a call and we will be able to guide you.
If you or anyone you know requires advice or would simply like a review of your financial situation, please call our office today to arrange an appointment on (07) 5574 0667.
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Wahlstrom Financial Services Pty Ltd, ABN 43 078 015 988, is a Corporate Authorised Representative of Millennium3 Financial Services Pty Ltd ABN 61 094 529 987 an Australian Financial Services Licensee number 244252. Millennium3 Financial Services Pty Ltd and Wahlstrom Financial Services Pty Ltd are not responsible for the advice given regarding lending. This information (including taxation) is general in nature and does not consider your individual circumstances or needs. Do not act until you seek professional advice and consider a Product Disclosure Statement. The views and opinions expressed within this letter are those of the author and do not necessarily reflect those of Millennium3 Financial Services Pty Ltd.