Billions in lost super waiting to be found

Australia’s superannuation industry is booming. But as the coffers of our retirement funds swell, the problem of lost super accounts continues to increase. Here we look at just how big a problem lost super has become, and how financial planners can benefit.

According to the Australian Taxation Office (ATO), the total amount of super sitting in lost member accounts has doubled from that of a decade ago. The total value of lost member accounts for the 2004-2005 financial year was $8.2 billion, sitting in a total of 5.4 million lost member accounts. To illustrate how fast the problem is growing, for the 2000-2001 financial year there was $5.5 billion sitting in 3.8 million lost member accounts.

For financial planners, these millions of lost member accounts represent a valuable opportunity to consolidate your clients’ superannuation funds into the one account. For your clients, super consolidation generally means lower fees and charges and less paperwork. And over the years, it provides better returns through the power of compounding returns.

How to find lost member accounts

If a client has lost track of some of their super, they should firstly seek the help of the ATO in finding their lost member accounts. The ATO keeps a Lost members register, which is a list of all members who have been reported by the super funds as having lost super.

Superannuation members will be reported to the Lost members register if:

• they could not contact the member because they have changed address
• the fund that the member’s contributions were paid into has not received any contributions or rollovers within the last two years, or
• the account was transferred to another fund or RSA as a lost member account.

The ATO has a SuperSeeker search that members can use online or by calling the ATO on 13 28 65. Alternatively, the member can contact their fund and ask them to conduct a search on their behalf through SuperMatch.

Many of the big super funds also offer a free search to members for lost super. Super funds are increasingly doing this because generally the fund that does the search will usually see the super money being rolled over into their fund.

As a financial planner, you should be encouraging your clients to search for their lost super so that they can benefit from the advantages of having their super in the one easy to manage fund.

The benefits of consolidating super

Consolidating super has many advantages. Firstly, it offers the opportunity for the client to reduce their fees and charges, because they’ll only be paying fees and charges on the one fund. Another benefit is that of compounding returns. Over time, one larger consolidated account will generally provide a higher return than several accounts with smaller account balances in them. And of course, with only one super account, there is less paperwork for the client to worry about. Before consolidating into one account however, the client should consider the implications including the loss of any insurance cover and any fees that may apply to withdrawing from the fund.