Finance expert warns: Aussies losing millions of dollars due to significant flaw

Written by Jakob A. Overgaard

Sep.09 - 2023 9:51 PM CET

Photo: Shutterstock
Photo: Shutterstock
A finance expert has raised the alarm on a significant flaw within the Australian superannuation system, which is costing citizens tens of millions annually.

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This loophole results in individuals being left up to $50,000 poorer upon retirement. Xavier O’Halloran, the Director of Super Consumers Australia, highlighted that the issue of duplicate accounts is a major concern. These redundant accounts lead to individuals unknowingly paying extra in concealed insurance premiums each year.

"It's a staggering amount, easily reaching into the millions, if not tens of millions, that Australians lose annually," remarked Mr. O’Halloran. "The system's design encourages minimal engagement. However, this means that when you start a new job, you're automatically assigned a new superannuation account unless you actively inform your employer of your existing one."

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This revelation comes in the wake of the Australian Securities and Investments Commission (ASIC) taking significant legal action against the country's largest super fund. The ASIC alleges that AustralianSuper, over a decade, cost its 90,000 members approximately $69 million. The fund was reportedly informed about the issue in 2018 but continued to charge members multiple fees and insurance premiums.

The extent of this problem is possibly even more widespread, with data indicating millions of active duplicate super accounts in Australia. O’Halloran commented, "While we expect superannuation funds to adhere to the law, the regulator's actions clearly signal a message to the entire industry. We suspect that AustralianSuper isn't the only one guilty of this."

O’Halloran strongly advises individuals to verify their superannuation account's status both before and after commencing a new job to sidestep these unwarranted expenses. He further elaborated that maintaining several super accounts throughout one's career could result in a deficit of about $50,000 by retirement.

"For those concerned about possibly having multiple accounts from various past employments, a simple solution is to access the bank via the ATO website," O’Halloran suggested. "There's a link that directs you to all your lost or unaccounted-for superannuation accounts. They're all enumerated there. With just a click, you can amalgamate them all into your chosen account."