Superannuation accounts

With nearly three super accounts for every worker, we need a new system that makes consolidating super easier
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  • Updated:10 Jul 2010

02.The issue

Superannuation tab on file

The issue

Getting bad news about your superannuation fund’s negative return is never enjoyable. But getting the same bad news two, three or even four times adds insult to injury. For millions of Australians with multiple superannuation accounts there has been a deluge of bad news from funds over the last six months.

As if that wasn’t enough, our report, Consolidation of Superannuation Accounts, confirms that unnecessary multiple accounts aren’t just annoying, they’re costing consumers millions of dollars each year.

CHOICE has been concerned about the problem of unnecessary multiple superannuation accounts for some time. We commissioned this report to answer a perplexing question: Why does the superannuation industry inflict this pain on the consumers it relies on to make a buck?

This report investigates and analyses the growth of multiple superannuation accounts and calculates the financial benefit of improving account consolidation processes and clearing the backlog of lost and unnecessary multiple accounts.

The report finds that extra fees, missed earnings and lost payments cost consumers the sizeable annual sum of $1.1 billion. For the superannuation industry the $416 million in extra fees (earned from an estimated 13 million unnecessary accounts) is the icing on the cake of Australia’s lucrative superannuation industry.

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Have you tried to consolidate your super funds without any success? Email us at

What needs to happen next "Choice campaigning for you" logo

The Federal Labor Government recently issued a discussion paper exploring options for delivering on its election promise to:

  • Introduce a superannuation clearing house.
  • Allow automatic consolidation of superannuation accounts.

CHOICE supports these measures. They must be implemented promptly so that, in the future, Australians can effortlessly move their superannuation savings between funds as they move between employers. And with the implementation of auto-consolidation CHOICE is confident that there will be no further need for Eligible Rollover Funds, thus removing another costly problem in the superannuation system.

But fixing the problem to prevent future multiple accounts is little comfort to the millions of people who are missing out on retirement income now. With $1 in every $5 sitting in inactive funds, creeping up towards $1 in $3 among the Industry Funds sector, multiple accounts are big business for fund managers.

Superannuation funds, particularly those with large pools of unnecessary inactive accounts, such as the Industry Fund, Retail Personal Superannuation and Public Sector Fund sectors, need to be more active. They must talk to consumers about their funds and facilitate easy consolidation of multiple accounts. Superannuation funds are quick to complain about their members’ apathy but slow to see it in their own behaviour.

In a period of financial market turbulence and plummeting superannuation returns you’d be forgiven for thinking that the main aim of superannuation is chasing returns. But it isn’t. It’s about maximising retirement income and there’s a subtle but important difference.

Consolidating 13 million unnecessary accounts into active accounts would put an extra $1.1 billion annually into Australia’s superannuation savings. As superannuation funds have been at pains to tell consumers recently, superannuation is a long term investment. So any money that can be saved today will be worth significantly more upon retirement. If the superannuation industry can deliver an extra $100 to members’ accounts through better systems and processes, then that’s a change worthy of vigorous pursuit.

What we’re doing

CHOICE commissioned a report by Rice Warner Actuaries, Consolidation of Superannuation Accounts, which discusses how multiple accounts are still costing consumers billions of dollars a year.

In 2006, CHOICE published the report Super Secret , that examines the nature and impact of the multiple accounts problem.

It is vital that employees and other consumers have faith in the superannuation system. Government needs to act to ensure that marketing and distribution of superannuation results in products and advice that is in the consumer's interest.

We are particularly concerned that commission based remuneration systems and limited product lists available to financial advisers can result in advice which is more in the adviser's interest than the consumers. For more see our report on soft dollar commissions and an interview with our former Senior Financial Services Officer Catherine Wolthuizen.

More information

Opinion piece: Consumer protection in super still faulty, Australian Financial Review, August 2008
Free money - finding your 'lost' super, July 2006

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