The Government estimates that 4.4 million people hold more than one super account. The problem with having unintended multiple accounts is that retirement savings are unnecessarily eroded by administrative fees and insurance premiums .
The ‘Your Future, Your Super’ reforms announced under the 2020 Budget include changes to address this flaw in our superannuation system.
How does this happen?
At the moment, every time you start or move jobs, a new super account may be created if you don’t nominate a super fund. Take, for example, a person who works across multiple casual jobs with different employers. It’s easy to see how they can end up with super split across different funds, and how easy it would be to lose track of the multiple super accounts.
Your super will follow you
Under the proposed arrangements, if you move job, your super will automatically follow you to your new employer. In other words, your new employer will contribute to your existing fund, rather than creating a new account for you with their chosen fund. People starting their first job will be able to choose their super fund. If they don’t, they will be put in the employer’s default fund.
Either way, when a person starts their next job, they will remain with their existing fund, unless they make a deliberate choice to change funds.
This means people will have a single, combined super balance, pay fewer fees and have potentially improved member outcomes.
These changes are yet to be written into legislation, but the Government is working on the basis that they’ll be up and running by 1 July 2021.
Is your super split across multiple accounts?
You can find and manage your super using ATO online services through myGov. Using ATO Online you can see all your super accounts, including any you may have forgotten about. You can also use ATO Online to combine multiple super accounts by transferring your super into one super account.
Before combining multiple accounts, you should check with your fund to see if you will lose any valuable insurance.
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