Millions of Australians hold multiple super accounts — and it could be costing them
Vanguard’s late founder, John C. Bogle, was known for championing the importance of reducing investment costs. It’s a principle that’s especially important for long-term investments like superannuation.
For Australians, a common scenario is having multiple superannuation accounts, which can lead to duplicate administration fees and, in some cases, insurance premiums. Data shows that it’s a problem that could be quietly eroding the retirement savings of millions of Australians.
How many Australians have multiple super accounts?
According to the Australian Taxation Office (ATO), around 4 million Australians held two or more superannuation accounts as of 30 June 2024.
That works out to 22% of the population of people with super.
There are some legitimate reasons to have multiple accounts — for example, some accounts may have valuable insurance policies that are unavailable elsewhere. But, the more accounts you have, the more you are likely to be paying in fees and costs.
As ASIC MoneySmart points out, consolidating your super can save you money, reduce paperwork and help you track your balance more easily.
How multiple accounts can affect your retirement savings
To illustrate the long-term cost of maintaining multiple superannuation accounts, we used ASIC’s MoneySmart Superannuation Calculator to compare two scenarios. Both assume a 30-year-old earning $90,000 annually with a starting super balance of $50,000, retiring at age 67.1
In the first scenario, the individual pays an administration fee of $74 and insurance premiums of $214 annually, which are the default amounts used by the calculator. We simulated the effect of a second super account by doubling these costs in an alternative scenario: annual administration fees rise to $148 and insurance premiums to $428. Over the working life, this seemingly small difference results in a nearly $15,000 impact on balances at retirement ($655,850 vs. $670,633).2
This example highlights how maintaining multiple superannuation accounts — and the resulting duplication in fees and insurance premiums — can impact retirement savings over time.
What to do before consolidating your superannuation
Before you consider consolidating your super, there are a few important things to check first.
Check your insurance cover
You should check if you have insurance through your super fund before switching, because you might not be able to get the same cover from another fund and you may be able to transfer this insurance to your new super fund. You should be particularly careful if you have a pre-existing medical condition.
If you’re unsure of your needs or need help, you can get independent advice from us.
Under Australian law, superannuation funds must cancel insurance on accounts that have been inactive (meaning no contributions or rollovers) for 16 consecutive months, unless the member opts to retain the cover.
Check your type of super fund
Some Australians, particularly those who worked in the public service, have “defined benefit” super funds. These funds can have very favourable terms, and they may not be possible to rejoin. It’s important to make sure you’ll be better off before you choose to leave.
Check your employer’s superannuation policy
It’s important to check with your employer around their policies with superannuation. Some employers may pay more to certain funds or subsidise administration fees or insurance premiums on your behalf, which means you could lose out on additional contributions, or lower fees or premiums, by switching.
Check which investments options are available
Finally, before consolidating your super to a single fund, it’s important to check the investment options that will be available and consider if they are appropriate for you.
You can find information about a fund’s investment options in the product disclosure statement (PDS), which should be available on the fund’s website. ASIC’s MoneySmart also has some information that can help you understand and navigate different super investment options.
What to consider when comparing super funds
When comparing super funds, it’s important to consider a range of factors including investment options available, historical performance (particularly over the medium to long term) and fees.
Even a small increase in fees of just 0.5% can significantly impact your retirement savings. For a typical full-time worker, this could mean a reduction of around 12% of their final balance, potentially costing them as much as $100,000.
You can find information about how to compare super funds on the ASIC MoneySmart website or seek help from us.
How to consolidate your super accounts
Thanks to recent changes to superannuation policies, it’s now relatively easy to switch or consolidate your super accounts.
To start, log in to the ATO’s online portal through MyGov. Using the Super menu option, choose “fund details” to see all your super accounts and balances.
To transfer your super, choose “manage” from the Super menu, then “transfer super”. Then, you need to:
- Select the fund you want to transfer from and close.
- Select the fund you want your money transferred to.
- Confirm your selection and submit request.
Finally, make sure to update your super fund details with your employer to ensure you continue to receive contributions.
1. Source: ASIC MoneySmart Superannuation Calculator. The calculations are based on certain assumptions and exclusions, which are listed on the MoneySmart calculator website.
2. Source: ASIC Moneysmart Superannuation Calculator. Both scenarios use the default investment option setting, which assumes a pre-tax annual return of 7.5%, a 7% tax on earnings, and investment fees of 0.85% per annum. Results are presented in today’s dollars, adjusted for inflation. The calculator applies an annual inflation rate of 2.5% to reflect rising living costs, plus an additional 1.2% to account for improvements in community living standards.
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing
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