If you are like most people, you start a new job and forget to give them your existing Super fund info… so they set you up with their default fund. You are busy getting into your new role only to find years down the line you have a small army of Super funds. All charging you fees.
The Government has recently passed some changes to make sure your future retirement savings doesn’t get eaten away with admin fees and insurance premiums. Aptly named the “Protecting Your Super” legislation, its effective 1 July 2019 so now Australia Post is busy delivering thousands of letters from Super funds they had completely forgotten about telling them their account is inactive or that their existing insurance may expire (let’s hope they have your correct address!). Most people will throw out their letters without any care or concern because Super is future you’s problem and you have other things on your mind. Before you do though, here are the high level deets:
The Government wants to stop every man and his dog taking your Super money by way of fees and insurance. If you haven’t made a contribution for 16months, it will be classed as ‘inactive’.
If it is classed as ‘inactive’, and, you have insurance attached (this is either cover that you are given as part of being a member, or, retail insurance cover that’s paid via your Super fund) you may find it ends up being cancelled unless you notify the Super fund otherwise. You need to opt in before the 1st of July 2019 so don’t wait for a rainy day before you get to it (wouldn’t want global warming preventing you from keeping insurance you determine you need!).
All superannuation accounts will be transferred to the ATO if:
- Your account balance is less than $6,000,
- You have no life insurance held in the account,
- You haven’t met a condition of release, and
- the account has been inactive for a continuous period of 16 months
What Fox & Hare make of all this:
Look, the premise is sound. Let’s not have your future retirement savings completely decimated by fees and insurance, but, and it is a big one… there are a few reasons why you may want to keep your fund and associated insurance alive. It might be that you have a health issue that means getting new insurance is a no-go, or you have changed jobs to a role that is considered too risky or you’ve become self-employed and haven’t made any super contributions… or you have had a period out of the workforce (to have a baby, study or sit on a foreign beach sipping pina coladas) which means you may not have an income to support getting income protection. All of these may mean its sensible for you to keep a small amount in your old fund and keep that insurance alive and well.
So, what to do?
Read the letters! Understand what Super and insurance you have (get advice if it’s all too hard and you need help), determine what you would need if something happened to you and if that means you are over insured or under insured and act accordingly (remember, if you do want to keep it you need to call and follow their opt in process – noting each fund has a different process). If you find yourself in a situation where you haven’t had any contributions go into your account for over 12months you may wish to consider making a contribution, so your account isn’t classed as inactive. You may want to think about consolidating all of your accounts into one (again, do some research on which is best). And, if it’s all too much and life admin isn’t your forte, we are happy to help, reach out here!
You can find more info here.⬅️
Any information in the above article is general advice only. You should consider your circumstances or reach out 📲 if you would like to discuss your individual needs.