Australians who hold multiple super accounts should contemplate consolidating their accounts or they might risk losing potential earnings due to new superannuation changes coming into effect at the end of October, according to the Industry Super Australia (ISA).
The changes would imply that all inactive, low-balance super accounts ($6,000) would be automatically rolled over to the Australian Tax Office (ATO) however, in cases where the ATO would be unable to match the old inactive accounts to their current accounts, account holders would risk losing out on investment returns.
This would be because the money from those old forgotten super accounts would sit with the ATO and would earn interest at CPI – which would be significantly less than what a person would receive if they had their super in an industry super fund.
On average, industry super funds returned a balance which was 4.5% higher than CPI, ISA said.
“These are good changes that will put more money back into the super nest eggs of thousands of workers – but it’s important Australians are aware they could miss out on extra earnings, if their old and forgotten accounts end up sitting with the ATO,” ISA’s chief executive Bernie Dean said.
“Sorting it out is easy – if you have multiple accounts you can consolidate now and protect and maximise your savings, or if you’re a person who has been out of the workforce for a while you can make a contribution to keep your fund ticking over.”
The changes would also affect those who were taking a break from the workforce, such as by studying overseas or caring for children.