Paul's Insights: Do a Marie Kondo on your super
In the last quarter of 2018, 66,000 Australians tidied up their super, and they’re collectively $860 million better off.
Kondo’s central maxim is that we should only hang onto things that spark joy. But before spending time re-organising your sock drawer, it’s worth channeling some energy into sorting out your super.
Finding lost money always feels good, and there’s a mammoth $17.5 billion pool of forgotten super gathering dust and waiting to be claimed. More than a third of Australians hold two or more super accounts, so there’s every chance some of it could belong to you.
The remarkable thing about these unclaimed accounts is that some are worth a small fortune. One NSW account has a balance of $2.2 million.
Tracking down lost super is getting easier all the time. Just link your myGov account to the Tax Office’s online services, and you can view all your superannuation accounts including any you may have lost track of.
If it turns out you have some unclaimed super, it makes sense to roll the balance into your main fund. Just check if you could be up for exit fees (these will be banned from 1 July 2019), or whether the fund includes any insurance cover that you want to hold onto.
A different type of ‘lost’ super could affect a far greater number of Australians. I’m talking about money that can be lost to high fees being siphoned from your super year after year.
You could be paying well below 1.0% annually in fund fees. Or you could be forking out over 2.0%. The difference really stacks up over time. A 30-year-old could lose $200,000 of their total retirement savings to fees if their super is invested in a high fee fund.
Don’t wait for your annual super statement to arrive. Jump onto your fund’s website and get to know what you’re paying in fees. There’s a handy online super calculator on the MoneySmart website that shows the long term impact of fees on your super balance. If you don’t like what you see, think about switching to a lower fee fund. It’s as easy as filling out some paperwork.
Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.
Frequently Asked Questions about this Article…
To find your lost superannuation accounts, link your myGov account to the Tax Office’s online services. This will allow you to view all your superannuation accounts, including any you may have lost track of.
If you discover unclaimed super, consider rolling the balance into your main fund. Be sure to check for any exit fees or insurance cover that you might want to retain before making the transfer.
Consolidating your super accounts can help you avoid paying multiple fees and make it easier to manage your retirement savings. It also reduces the risk of losing track of your super.
High fees can significantly reduce your superannuation savings over time. For example, a 30-year-old could lose $200,000 of their total retirement savings to fees if their super is invested in a high fee fund.
A reasonable fee percentage for a super fund is typically below 1.0% annually. If you're paying over 2.0%, it might be worth considering switching to a lower fee fund.
You can check the fees you're paying on your super fund by visiting your fund’s website. Additionally, the MoneySmart website offers an online super calculator to show the long-term impact of fees on your super balance.
Exit fees on super funds will be banned from 1 July 2019, making it easier and more cost-effective to switch funds if you find a better option.
Regularly reviewing your superannuation helps ensure you're not losing money to high fees, and it allows you to consolidate accounts and maximize your retirement savings. It’s a proactive way to manage your financial future.
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