MILLIONS of Australians are being ripped off by their super funds and they don’t even know it, a Treasury analysis reveals.
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.