Australians are losing upwards of tens of millions of dollars per year due to a vicious loophole in the super system which is leaving people up to $50k worse off when they leave work, a finance expert has warned.
Director of Super Consumers Australia Xavier O‘Halloran duplicate accounts were a “huge” problem causing people to unknowingly fork out hundreds in hidden insurance premiums every year.
“It would easily be in the millions, if not tens of millions of dollars lost every year in Australia,” Mr O’Halloran said.
“The system is designed so you don’t have to engage too much with it, but the downside of that is that if start a new job, you’ll automatically get set up with a new superannuation account unless you take active steps to let employers know that you’ve already got one.”
The warning comes after Australia’s corporate watchdog launched major legal action against the nation’s biggest super fund over allegations it failed to take action over tens of thousands of duplicate accounts.
On Friday, the Australian Securities and Investments Commission (ASIC) alleged AustralianSuper had costed 90,000 of its members about $69m between 2013 and 2023. Lawyers allege the super giant was made aware of the issue in 2018 yet still charged members multiple sets of fees and insurance premiums.
This issue is likely occurring on a far wider scale given the data showing millions of duplicate super funds currently active in Australia, Mr O’Halloran said.
“You would hope that (superannuation funds) follow the law, but I think it’s pretty clear from the regulator’s action that they want to send a message to the rest of the industry, and we have suspicions that AustralianSuper is not alone in this regard.”
Mr O‘Halloran urged people to double check where there existing superannuation account is before and after starting a new job to avoid paying unnecessary costs.
He said modelling suggests that if people keep up multiple super accounts throughout their working life, they are about $50k worse off by the time they retire.
“If you’re worried that you might have multiple accounts out there already from multiple jobs that you’ve had in the past, one of the easy ways to find out is to log into the bank via the ATO website,” he said.
“They have a little link that you can click through on that finds all of your lost or unknown about superannuation accounts. They’re all listed there. And with a click of a button, you can consolidate them all and merge them all into your preferred account.”