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Lost super costing Australians thousands

Lost super costing Australians thousands

If you’ve had more than one job during your career, chances are you have more than one superannuation account – and are paying more than one set of fees.

On average, every working Australian has three superannuation accounts and the Association of Superannuation Funds of Australia (ASFA) says younger Australians are missing out on thousands of dollars in retirement savings by not consolidating their superannuation.

According to a recently released study by ASFA, almost half of Generation Y and approximately 40 percent of Generation X surveyed said they had not “got around” to consolidating their super accounts yet, with one in five reporting they don’t know how to go about it.

In addition, one in five of Gen X and Y did not know if they had lost or unclaimed super. AUSfund figures show that one in two Australians has unclaimed super.

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“Every day your super stays lost, or every day you pay fees on an unnecessary account, is a day you are losing valuable retirement money,” said ASFA CEO Pauline Vamos.

Vamos added that while retirement may seem a long way off to young Australians in their 20s and 30s, they had the most to gain from consolidating their super.

“With the effect of compound interest, every dollar you put into your superannuation before age 35 will be seven extra dollars you will have in retirement,” she said.

“This means every dollar you save on unnecessary fees, or every dollar of lost super you find, is worth seven times more to your retirement savings.”

How to reclaim lost super

The Australian Taxation Office provides a free online service, dubbed SuperSeeker, that can help you track down any lost super you may have. If SuperSeeker tracks down lost super belonging to you, you can arrange to transfer the amount into the super account of your choice – the transfer generally happens within three working days.

Alternatively, AUSfund holds lost funds to the tune of $500 million from 40 of Australia’s biggest superannuation funds and provides a free service to help locate and transfer any lost amounts into active super accounts. You can use a quick online rollover tool or if the sum is less than $200, you can claim a cash payment.

You can also contact your active superannuation fund and ask for help in consolidating your accounts. Most funds provide a service that does all the hard work for you.

“The perception for many people is that the process of finding lost super or consolidating accounts is fraught with difficulties. However, the ATO has made it easier than ever before to find your lost super or to move your super into one account. By using tools like the ATO Online Services and SuperSeeker, just a few clicks could make you thousands of dollars richer in retirement,” Vamos said.

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Learn more about superannuation

How do you find lost superannuation funds?

Lost superannuation refers to savings in an account that you’ve forgotten about. This can happen if you’ve opened several different accounts over the years while moving from job to job.

You can use your MyGov account to see details of all your superannuation accounts, including any you might have forgotten. Alternatively, you can fill in a ‘Searching for lost super’ form and send it to the Australian Taxation Office, which will then search on your behalf.

How do you find superannuation?

Lost superannuation refers to savings in an account that you’ve forgotten about. This can happen if you’ve opened several different accounts over the years while moving from job to job.

You can use your MyGov account to see details of all your superannuation accounts, including any you might have forgotten. Alternatively, you can fill in a ‘Searching for lost super’ form and send it to the Australian Taxation Office, which will then search on your behalf.

How long after divorce can you claim superannuation?

You or your partner could be forced to surrender part of your superannuation if you divorce, just like with other assets.

You can file a claim for division of property – including superannuation – as soon as you divorce. However, the claim has to be filed within one year of the divorce.

Your superannuation could be affected even if you’re in a de facto relationship – that is, living together as a couple without being officially married.

In that case, the claim has to be filed within two years of the date of separation.

Either way, the first thing to consider is whether you’re a member of a standard, APRA-regulated superannuation fund or if you’re a member of a self-managed superannuation fund (SMSF), because different rules apply.

Standard superannuation funds

If your relationship breaks down, your superannuation savings might be divided by court order or by agreement.

The rules of the superannuation fund will dictate whether this transfer happens immediately, or in the future when the person who has to make the transfer is allowed to access the rest of their superannuation (i.e. at or near retirement).

Click here for more information.

SMSFs

If your relationship breaks down, you must continue to observe the trust deed of your SMSF.

So if you and your partner are both members of the same SMSF, neither party is allowed to use the fund to inflict ‘punishment’ – such as by excluding the other party from the decision-making process or refusing their request to roll their money into another superannuation fund.

This no-punishment rule applies even if the two parties are involved in legal proceedings.

Click here for more information.

Financial consequences

Superannuation funds often charge a fee for splitting accounts after a relationship breakdown.

Splitting superannuation can also impact the size of your total super balance and how your super is taxed.

Click here for more information.

What is a superannuation fund?

A superannuation fund is an institution that is legally allowed to hold and invest your superannuation. There are more than 200 different superannuation funds in Australia. They come in five different types:

  • Retail funds
  • Industry funds
  • Public sector funds
  • Corporate funds
  • Self-managed super funds

Retail funds are usually run by banks or investment companies.

Industry funds were originally designed for workers from a particular industry, but are now open to anyone.

Public sector funds were originally designed for people working for federal or state government departments. Most are still reserved for government employees.

Corporate funds are arranged by employers for their employees.

Self-managed super funds are private superannuation funds that allow people to directly invest their money.