Consumers are losing $1.1 billion a year in extra fees, missed earnings and lost payments through unnecessary superannuation accounts, a Choice report has revealed.
“There are 13 million superfluous and inactive accounts clogging the Australian superannuation system and eroding retirement incomes,” the consumer group said.
“One in six workers changes jobs each year and while most join a new employer sponsored super fund, the majority do not consolidate their existing super accounts.”
Choice senior policy officer Elissa Freeman said the superannuation industry rakes in $416 million each year just in extra fees on unnecessary accounts.
“Some people will have good reasons for maintaining more than one account, but for others multiple accounts exist because the system is not working as well as it could,” Freeman said.
The report, prepared by Rice Warner Actuaries, stated that the paperwork associated with rollovers and difficulties in transferring funds can be barriers to consolidation.
The Federal Government has issued a discussion paper on its proposal to introduce automatic consolidation of superannuation accounts, but according to Choice, the industry needs to simplify consolidation processes and encourage people to rollover funds now.
“Automatic account consolidation will reduce the number of unnecessary superannuation accounts in the future. But it will not assist the millions of people who are missing out on retirement income now,” Freeman said.
