‘Many Australians would not be aware that if you lose touch with your super fund, you can be transferred to an eligible rollover fund (ERF), which may not suit your long term retirement needs’, ASIC Executive Director of Consumer Protection, Mr Peter Kell said.
‘ASIC estimates at least 3 million super fund accounts have been transferred into ERFs.
‘ASIC is concerned that consumers may not understand how ERFs differ from other superannuation funds, or the circumstances in which their superannuation benefits can be transferred to an ERF’, Mr Kell said.
‘While an ERF is as safe as any other superannuation fund, it may not have features, like insurance cover or investment choices, you want or need’, Mr Kell said.
A super fund account can be transferred to an ERF, without any warning that the transfer is about to take place, if you become a ‘lost’ member. This could happen more easily than you might think. For example, you can become lost if:
‘Members can become lost all too easily when they change jobs, leave work or move house. These life events are not unusual and indeed occur regularly for many people’, Mr Kell said.
ASIC urges all superannuation fund members to let their fund know when their work or living arrangements change, to make sure their super benefits move with them. You should add your super fund to the list of people and organisations you automatically contact when your personal details change, just like family and friends, a school, bank or doctor’, Mr Kell said.
‘ASIC recommends checking if your fund might transfer your benefits into an ERF if you stop contributing, and to make an alternative plan if that doesn’t suit you’, Mr Kell said.
5 step plan for consumers
|1.||Track down any lost super benefits – Use Superseekers operated through the Australian Taxation Office if you think you may be a lost member.|
|2.||Stay in touch with your super funds.|
|3.||Understand the features of your super funds.|
|4.||Reduce fees, charges and paperwork by consolidating your super accounts, if possible.|
|5.||If you are in an ERF, decide if you want to move your benefits into your current fund or a new fund or if you want to stay in the ERF. Think about what is best long term.|
ERFs are basically like other superannuation funds but are designed to receive superannuation benefits that other superannuation funds did not want or could not keep.
ERFs offer some protection against benefits being eroded by administration fees, but fees may still be charged. It means only that fees on your account cannot exceed the investment return allocated to your account. ERFs still charge tax and can also deduct fees before determining each member’s investment return.
Each superannuation fund has different rules regarding when it will transfer members benefits into an ERF. Information about when your benefits can be transferred into an ERF can be found in the latest annual report from your current fund (or you have only recently joined the fund – the on-joining information).
End of release
See also Media release 04-17 ASIC review into disclosures by eligible rollover funds