Paul's Insights: Super zombies - could you be affected?

Human beings can be a funny lot. On one hand the Australian Tax Office (ATO) receives around 230 tip-offs each day about businesses operating in the black economy. Yet vast numbers of Australians are being ripped off on their super each year, and many of us do nothing about it.

Figures from Industry Super Australia (ISA) show one in three workers – around 2.85 million people, could be missing out on the full value of employer-paid super contributions.

Your boss’s super contributions should appear on your regular pay slip but that’s no guarantee they’ve been deposited into your fund. These contributions only need to be paid quarterly, and ISA suggests some employers may use this to sidestep their super obligations. However, a lot of employers, especially small businesses, simply don’t have the staff and systems to get it right.

Regardless of theft or error, the point is that we need to check our super is spot on.

This means taking a look at your super account at least quarterly to be confident the boss has deposited contributions into your account. If they haven’t, it’s worth raising the issue with your HR department, or in a smaller business, have a word with your employer – as hard as that may be.

Frankly though, our own complacency can be a big cause of lost super savings. Currently, 5.8 million Australians, have more than one super account.  Yet one in four people don’t know they have multiple super balances. This makes it possible you could have money stashed in a ‘zombie’ super fund.

These are accounts with less than $6,000 that have received no contributions for at least 16 months. New measures have come into place to prevent life insurance premiums coming out of zombie accounts, and the annual fees are limited to 3%. But that’s still a high fee grab.

Since 31 October, zombie accounts may be transferred to the ATO, which will try to reconnect the money with the rightful owners. Accounts that can’t be matched to a current super balance won’t be impacted by fees but the money will only earn interest at the rate of inflation, and that means missing out on investment returns.

To find out if you have a zombie account, ask your main super fund to run a search for you. Or create a MyGov account and link it to the ATO to see if any forgotten super savings match your tax file number. 

Unless you take action to consolidate inactive balances into your main fund, chances are, money that’s rightfully yours for retirement will either be eaten away by fees or simply go nowhere due to near-zero returns.


Paul Clitheroe is Chairman of InvestSMART, Chairman of the Australian Government Financial Literacy Board and chief commentator for Money Magazine.

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