The Australian Taxation Office (ATO) has urged taxpayers to check their retirement savings after finding there was $17.5 billion unclaimed superannuation waiting to be found in 2017-18.
New ATO research has found there are 6.2 million “lost” superannuation accounts in Australia which are not active, with some nest eggs holding millions of dollars in unclaimed funds.
The findings have raised concerns super contributions employers are obligated to make are going unused, and instead being eaten up by super fund fees over time.
Stacey Price, founder of Healthy Business Finance, has called on employers to do more to help workers navigate the superannuation landscape, especially when staff are onboarded.
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“If there’s a lot of money sitting there then it’s really not benefiting anyone,” she tells SmartCompany.
“It adds up pretty quick .. [as employers] we hope we’re contributing to fund someone’s future, not [contributing funds] to just sit around and be eaten by fees.”
An employers responsibility?
Price, who employs four people herself, says businesses should have a conversation with new and current employees about their super arrangements and encourage them to nominate their preferred fund.
“From an employers point of view, its very easy to ask new staff if they just want to join a default fund, which is generally not the fund an employee already uses,” she says.
“It just needs to be a conversation, explain it to people, especially if they haven’t been working long or have come from overseas … they might not know.”
Price says younger workers are particularly vulnerable and often quickly racked up multiple super accounts after hopping through casual jobs before moving into corporate roles later in life.
ATO assistant commissioner Graham Whyte said it was one of the tax office’s priorities to reunite people with their super, saying people often ran into trouble when changing jobs or moving house.
“Our data shows there are some large amounts still lost. For example, one New South Wales account has over $2.2 million waiting to be found,” he said in a statement.
The amount of unclaimed superannuation has been improving, declining $420 million in 2017-18 after more than $3 billion was consolidated into active accounts.
Whyte said the ATO’s new MyGov portal, which allows taxpayers to view all their super accounts in one place, including those which have been “lost or forgotten”, was key
David Boyar, chief executive of accounting firm Sequel CFO, says there’s a lot of pressure on small business owners to get it right when onboarding new employees.
“The cause of the problem is the onboarding of a new employee can sometimes be onerous for a small business owner,” he tells SmartCompany.
“It’s an onerous administrative task … there’s a lot of paperwork.”
Boyar says new cloud-based HR systems and the introduction of single touch payroll are changing the administrative landscape for small business owners, but he ultimately believes employees also have a responsibility to look after their finances.
He says financial literacy among the workforce is lacking, driving issues with unclaimed super, and services like the ATO’s MyGov portal are an avenue to potentially address super problems.
Worst offenders: The 10 areas with the most outstanding super
- Mackay, 4740 (QLD), 12,140 accounts valued at $60.17 million
- Liverpool, 2170 (NSW), 13,236 accounts valued at $59.18 million
- Cairns, 4870 (QLD), 15,450 accounts valued at $57.46 million
- Werribee, 3030 (VIC), 10,457 accounts valued at $56.56 million
- Toowoomba 4350 (QLD), 13,425 accounts valued at $53.25 million
- Campbelltown 2560 (NSW), 11,310 accounts valued at $50.19 million
- Surry Hills and Darlinghurst 2010 (NSW), 7646 accounts valued at $45.65 million
- Sydney 2000 (NSW), 6,520 accounts valued at $44.04 million
- Mandurah 6210 (WA), 10,983 accounts valued at $43.97 million
- Hoppers Crossing 3029 (VIC), 9,296 accounts valued at $43.76 million