Finance Minister Kelly O’Dwyer told us all last week to amalgamate super funds to avoid fee rip offs by rapacious funds. Well, Minister, that may be easier said than done!
I consider myself pretty savvy with money.
I have a few different bank accounts to take advantage of the best interest rates. I have two credit cards to make the most of various benefits which I religiously pay off, in full, every month. I’ve dipped a few tentative toes in the share market. I have a term deposit labelled “For A House” that I move every time it matures to make sure I’m getting the highest rate.
In short, I’m the person my friends come to for financial advice, because I don’t charge them and I always leave room in their budget for wine.
But for some reason, my super remains a hazy fog. It’s probably something to do with the fact that, as an under 30, retirement seems a long way off. I’m not terrible, I’m just not as active with it as I am with all my other assets.
A couple of years ago I checked in and discovered I had no fewer than three different super funds in Australia (I have one in New Zealand as well).
One was opened for me when I spent a summer working here nearly a decade ago. I hate to think what percentage of what was in there was eaten by fees. Another was opened when I started my first full-time job here a few years later. Again, not a lot of money went in, I can only imagine I lost a big chunk of it to fees. And I had the one I was set up with when I started the job I was in at the time I was checking.
I hate paperwork more than pretty much anything, but eventually the thought of all the extra fees I was paying forced me to take action. I linked my myGov account to the ATO and used their “find and consolidate” tool to roll everything into the industry fund I was with at the time.
It was surprisingly easy overall, and I went back to feeling smug about being on top of my finances.
Fast forward two years and I’m now full-time freelance. One of my major clients – the company I was last full time at – pays me super, but most don’t (bad, I know) so I’m aware there’s not a lot going in. Someone told me you’re supposed to have $30,000 in your super by the time you’re 30, so I jumped online to check how I stack up.
It turns I have two super accounts again. Worse, I have two accounts with the same super fund. I’m paying multiple fees to The. Same. Super. Fund.
On the ATO site, furiously clicking Consolidate Super only resulted in being posted a huge swathe of paper I couldn’t make head or tail of. I tried to register on the fund website but I kept being told I couldn’t be processed. Eventually I gave up and rang the fund to help me and explain what the heck is going on.
The friendly guy on the other end had the grace to be a bit apologetic when I pointed out that having two accounts is complete madness, and said he’d talk me through it. Firstly he gave me the member numbers of the two accounts I have, neither of which matched the number on the forms I’d been sent. That, apparently, was the member number of the form I’d been “exited” from. What?
In simple terms, when I left my full-time job, my corporate account was rolled over into a personal account because I gave the fund no other instructions. I had no idea any of this was happening. It’s possible something was posted to me, but I move house a lot and don’t always update my address immediately.
Then, my former employer/ current client changed the way they hire freelancers and instead registered me as a casual worker. I ticked the box that said I was happy to be on their default fund, because as far as I knew, I already had an account with them and my money would just go in there.
Instead, they opened another corporate account for me and started paying into that.
I was pretty annoyed that the fund was allowed to open an account that was clearly a duplicate for an existing member, but apparently the fund just opens accounts whenever they’re told to. The exact phrase used was “It’s incumbent on the company to offer employees the choice of a super fund, and on the member to check their accounts.”
Maybe I’m wrong, but I can’t see why anyone at my age, with as little as their super as me, would want to have two accounts, and maybe it should have been flagged as an issue.
I said I wanted to roll them into one and be done with it, but they wanted to charge me a $75 exit fee! To not leave the fund. That was when I got cranky, and the guy on the phone quickly agreed there was probably some way they could waive that.
He transferred me to a financial advisor for some general super advice, which was actually quite helpful. She talked me through the issues of choosing a fund, with the repeated disclaimer that she couldn’t give me any specific advice, and there was quite a lot to consider.
If I wanted to roll it into my personal account, I would have to find the choice of fund form online, fill it out and send it to HR at my client. If I wanted to roll it into my corporate one, which apparently has lower fees, I would have to watch out in case I was ever rolled back onto a personal one like last time.
I have no beneficiaries, so I don’t see the point in paying for death insurance (but I think disability insurance makes sense) and I can opt out with the personal account but not the corporate one… So many things to think about.
After a full hour on the phone, I hung up without having actually consolidated my two accounts, but with a slightly better idea of what’s going on.
What I still don’t understand, though, is why the system needs to be so complicated. If I hadn’t happened to look at my super, I would have gone on paying double fees for months or years, assuming that consolidating once was enough.
So thanks, Minister, for pointing this out. Now, how do I fix it?