If you haven’t yet gotten around to consolidating your old superannuation funds, a new initiative may end up taking care of it for you, potentially saving you hundreds of dollars per year in duplicate fees and insurance premiums.
The collective cross fund matching initiative will be free to industry super fund members, and comes as a result of the cooperation of 18 industry super funds.
According to Productivity Commission estimates, over the course of a working life, an unintended multiple account can leave a typical member with $51,000 or 6 per cent less to retire with.
By automatically consolidating 500,000 inactive low balance accounts, the initiative may save eligible members an average of $260 per year, or more than $100 million per year in total.
The initiative follows a pilot program in 2017, where Industry Funds Services and nine industry funds consolidated 50,000 accounts.
Industry Super Australia chief executive, Bernie Dean, said that the initiative was developed to cut through restrictive rules that limit the ability of funds to reunite members’ lost and inactive savings without first obtaining express consent, though members will still have the option to opt out.
“This is the right thing to do for members – they expect the system to sort out multiple accounts for them”.
“Industry super funds have been consolidating multiple accounts for many years but it has relied on members kicking it off. This new initiative will cut through the red tape.”
“Consolidating the accounts will reduce duplicate charges and help members build their super savings faster.”
How the collective cross fund matching initiative works:
- Eligible inactive super accounts with balances under $6000 will enter a collective pool to be matched to the active account held by participating funds.
- There will be no charge to members for matching their super fund, and no exit fees for duplicate accounts closed as accounts are consolidated.
- Industry Super-owned AUSfund – an Eligible Rollover Fund – will be used to match and consolidate members’ inactive accounts to an active account held in a participating industry super fund.
- Any inactive accounts sent to AUSFund but not consolidated in the initial wave of matching will attract investment returns, minus an annual administration fee of $11.50 and 0.53% indirect costs, until consolidated in subsequent matching waves.
- Where required, funds will inform members of their fund’s participation in the cross-fund matching exercise through disclosures, including the annual member statements.