HomeMedia Centre2007 Releases

FEWER MULTIPLE SUPER ACCOUNTS THAN THOUGHT, BUT MORE THAN WE NEED
 
New research from ASFA – The Voice of Super has found that while a recent Choice report significantly overstated the incidence and costs of unwanted multiple superannuation accounts there are no grounds for complacency on the part of funds.

The ASFA Research Centre Report on “Aggregate and individual costs of multiple superannuation accounts” provides a considered study of the issues related to multiple superannuation accounts, including the costs involved. By better identifying the causes and extent of multiple accounts the research will assist in the development of targeted solutions to the problem.

As a result of the research, Ross Clare, ASFA’s Research Director, estimates the aggregate costs of unnecessary and duplicate accounts is in the order of $315 million annually. This is a significant deadweight cost for funds and fund members, but the amount is a far cry from the $2 billion a year claimed by Choice in its report.

The components of $315 million costs of the true unnecessary and duplicate accounts are thoroughly explored in the ASFA Report, as are initiatives that aim to help in finding and/or consolidating super accounts.

The ASFA Report states that there are around 14 million necessary primary superannuation accounts for resident Australians, former residents and former visitors. In addition, there are likely to be a further 4 million accounts over and above those primary accounts, which are wanted, justified or unavoidable on various grounds, which the Report details extensively. This compares to around 28 million accounts in total.
“Care is needed in developing solutions to the problem of unwanted and unneeded multiple accounts. Proposals to set up a centralised fund and to relax identity checks of persons seeking to transfer superannuation account balances could well end up costing members more through higher costs, lower returns and a much higher incidence of theft and fraud” Ross Clare said.

“While there are no grounds to be complacent, Australian arrangements for consolidation and tracking lost super already are better than anywhere else in the world. As well, ASFA, government and other industry groups are continuing to develop improved transfer protocols and getting rid of unnecessary red tape.”

That the system can work is demonstrated by the 800,000 members who transferred balances or exited from funds in 2004-05. The challenge is to build on this and have everyone who wants to or needs to consolidate their accounts able to do so without compromising investment returns or the security of their superannuation savings.

“Aggregate and individual costs of multiple superannuation accounts” can be found on the ASFA website at www.superannuation.asn.au

Further information:
Ross Clare, ASFA Director of Research on 02 9264 9300 or 0417 680 908
Gillian Tatt, ASFA Public Affairs Manager on 02 9264 9300 or 0413 593 568