Multiple super accounts? You're likely losing money

You could be saving time and money by putting all your super into one account.

Having a single super account means you:

• save money by not paying fees for multiple accounts
• have to maintain and receive less paperwork
• can easily keep track of your super balance 

More than $20.8 billion^disclaimer of Australians' money is currently lost and unclaimed super across Australia, according to the Australian Taxation Office (ATO).

How to search for your super

1. Check if you have any dormant super accounts.
2. Decide which account you want to roll the others into by comparing the funds' returns, investment options, their fees and charges.
3. Check your insurance cover.
4. Once you've selected the account you can consolidate your super via MyGov in just a few clicks, or the fund you are rolling into can do this for you.
5. Organise for your employer to pay your super into your chosen account.

The case for one super account

For many people, accumulated super savings will not only be their major source of income in retirement, but possibly their only income, so it's vital you get your super in order as early as possible to maximise that investment. It might feel distant now, but when you're in your 60s and retirement is right before you, that money will be very real.

The Productivity Commission 2018 report found that over a third of all super accounts are 'unintended multiples' — created when a new default account is opened for a member when they change jobs or industries, and the member does not close their old account or roll over their existing balance. These unintended multiples collectively cost the members who hold them $1.9 billion a year in excess insurance premiums and $690 million in excess administration fees. Over time, the foregone returns compound to unnecessarily erode their retirement balances, and can leave a typical full-time worker 6 per cent (or $51,000) worse off at retirement.^disclaimer

So eliminating unnecessary super accounts is crucial to optimising your super balance at retirement. One big problem is people's ignorance and confusion about this. RetireInvest Hornsby financial adviser Mark Robinson says many people have no idea what consolidation even is, let alone why they should bother.

Let's clarify: combining your multiple and often long-forgotten super accounts into one has a range of benefits. Not only does it help you to more easily keep track of your investments, but it will, in most cases, save you a large amount of money over the long period of time you accumulate superannuation savings, as you won't pay multiple fees and insurance premiums.

“The perception is out there that it is cheaper to have one fund than several. This tends to be the case particularly where funds charge fixed as well as percentage-based fees. I think the main benefit is simply that it is easier to keep an eye on one or two funds than five or six. It results in less mail, emails to worry about reading or actioning, and a clearer view on how you're travelling towards whatever goal you have set,” says Robinson.

Millennials are especially disengaged from super

A large portion of Millennials in particular seem disengaged with the subject of super and the whole concept of consolidating accounts, according to a March 2017 report by The Association of Superannuation Funds of Australia.

By failing to consolidate multiple super accounts, these young people especially risk eroding their balances unnecessarily by paying multiple fees and charges.

The report found:

• young Australians tend to have more money in their super accounts than in the bank, yet 40 per cent have no idea what their super balance is and a further 16 per cent only have a vague idea
• more than 30 per cent of those aged 18 to 25 have more than one super account and 10 per cent have three or more accounts; for those aged 26 to 30, nearly 20 per cent have three or more accounts
• more than 60 per cent of young Australians have multiple super accounts because they haven't consolidated them, while 30 per cent said they had trouble finding old accounts
• $1000 invested today by a Millennial will deliver $4000 or more in today's dollars at retirement.

Your four-step guide to rounding-up your super

1: The easiest place to start is to check where your dormant super accounts are. Once you sign-in to the MyGov website and link your account to the Australian Taxation Office, you should be able to see all of your funds in one place.

2. Decide which of your accounts you want to roll the others into. Robinson recommends focusing on funds that:

• offer flexible insurance options to suit your circumstances
• have a good range of investment options, factoring in risk and diversification
• suit your desire to take a low cost or more active investing route.

“Gather together your various statements as they come in over July and August and either take them to an adviser to sort through, or make a basic spreadsheet listing what each fund is worth, how the money is currently invested, how fees are charged, and what active insurance lies within each,” suggests Robinson.

“Only then will you begin to feel in control and able to accurately gauge the potential benefits of consolidation, and make a decisions as to whether it is something you can do yourself or need help with.”

3. Once you've selected the account you want, you can bring together all your super via MyGov in just a few clicks, or the fund you are choosing can do it for you, or at least guide you through the process.

4. Make sure you organise for your employer to pay your super into your consolidated account (PDF). That way you're not just creating another account you may lose track of in the future.

Ready to round-up your super?

First, Robinson says to consider that people often overlook insurance in their superannuation and lose it when they switch to one account. You'll want to make sure you have the insurance you want in the super fund you consolidate into.

There's two other considerations. Those drawing a pension from their super may find cash flow flexibility across different market conditions in having one fund investing in defensive assets and another in growth assets. Also, “consolidating a tax-free fund with a taxable fund can lead to a loss of flexibility in estate planning in retirement” warns Robinson.

But for most of, the advantages of one super account are clear.

ANZ Smart Choice Super members can search for other super accounts^disclaimer while logged in to ANZ internet banking. Once logged in, you can see your other accounts, approximate balances and any insurance.

If you don't have access to ANZ Internet Banking, you can still bring all of your super accounts into your ANZ Smart Choice Super account through the ATO website via myGov. 

1. Get online: 
   • Go to my.gov.au 
   • Log on or create an account
   • Link your myGov account to the ATO
   • Follow the prompts to round-up your accounts
2. Search:
   • Consent to a SuperMatch search. 
3. Submit:
   • Select the accounts you would like to round-up.