Claim your share of $13.6 billion in lost super

Claim your share of $13.6 billion in lost super

With tax time just around the corner, RateCity shows you that claiming your lost superannuation can help you get a bigger tax return and make the most from your savings.

June 28, 2010

Most of us have accumulated more than one superannuation account as we have changed jobs, changed home addresses and even changed our names, so along the way our super accounts lose track of us and us of them.

As a result, at the end of June 2009, the value of lost super in Australia was worth $13.6 billion, which was up $700 million from June 30, 2008, despite a decrease in lost members, Australia Taxation Office (ATO) figures indicate.

This equates to approximately one in every two working Australians have an unclaimed super account, Australia’s unclaimed super fund AUSfund says.

How can you claim your share?
The ATO has set up SuperSeeker, which is a site dedicated to finding your lost and unclaimed super. This search tool is able to find a majority of your lost super accounts so you can then consolidate all accounts into one main account. By doing this, not only will you save on potential administration fees but it makes it easier for you to track and manage your money in the future.

For super accounts with a balance of less than $200, the superannuation law allows you to withdraw the funds upon terminating your employment or membership, or you can roll it over into your main super account. Be aware that that you may have to pay tax if you withdraw the money.

For superannuation accounts with a balance of less than $1000, special rules apply concerning the level of administration fees that are deducted from your account, so it’s best to contact your fund or seek professional advice.

In addition to your employer’s contributions you can make your own contributions through salary sacrificing. How it works is that you receive less in your pay but your employer contributes that amount to your super. Because this amount is from your gross salary you save on paying tax.

You may also be eligible for the federal government’s co-contribution, where if you make a further contribution the government will match it, tax free. All these tax savings will mean that you may receive a larger tax return, so what should you do with this money?

Earn more with an online savings account
If you were to deposit your tax return into an online savings account you can earn a higher rate of interest than leaving it in your transaction account, and increase your savings faster over time. This is extremely beneficial if you have a goal in mind that you want to reach, such as a deposit for a home loan or a holiday overseas.

There are a range of online savings accounts available that offer high interest rates, such as UBank‘s USaver at 6.42 percent, or RaboDirect‘s High Interest Savings Account which is currently at 6.40 percent. For example by depositing your tax return worth, let’s say $3000, into this account and deposit $200 into the account each month for 12 months you can save $5400 and potentially earn more than $270 worth of interest at a rate of 6.42 percent.

So claim your lost super to save in tax and open up an online savings account to deposit your tax return into and reach your savings goals sooner.

 

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Learn more about savings accounts

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.