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Lost account clean-up hits super membership

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By Rachael Micallef
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3 minute read

Super fund membership has dropped for the first year in Australia’s superannuation history, with numbers to continue dwindling over the next 12 to 18 months, according to SuperRatings.

With the first broad tranche of lost member transfers to the Australian Taxation Office (ATO) taking place in the June 2013 quarter, membership of Australian superannuation funds dropped by 1.5 per cent.

SuperRatings head of consulting Adam Gee told InvestorDaily that the reduction wiped out any membership growth in the previous three quarters of the 2012/2013 financial year, and that numbers will continue to decline.
 
“It is going to have a continued impact, obviously, as the balances that the ATO will start to take are increasing over the next two or three years,” Mr Gee said.

“At the moment it’s a $2,000 balance so any lost members under $2,000 will go [to the ATO].

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“That will increase to $4,000 in about a year and a half and then to $6,000 by 31 December 2016, so we would continue to see a decrease in membership as a result of that.”

In addition, Mr Gee said the January 2014 commencement of StrongerSuper auto-consolidation will further decrease super membership levels.

Under the reform, lost and inactive accounts with a balance of less than $1,000 will be consolidated into a member’s active super fund.

“I’d suggest certainly we’ll continue to see a greater reduction in membership over the next 12 to 18 months as a result of account consolidation as well,” Mr Gee said.

As a result of the decline in membership numbers, SuperRatings found that many funds had undertaken targeted member engagement campaigns to reduce the impact.

Mr Gee said the differences between funds that engaged with their members and those that were not prepared to do so will become pronounced.

“A lot of funds are increasing member engagement to try and locate a lot of those lost members [to stop] those transfers from going to the ATO,” Mr Gee said.

“They’re usually the larger funds that are more resourced to be able to do those sorts of things, via outbound call centres and the like.

“What I would suggest though is some of the smaller funds who don’t have those sorts of resources and have very large [numbers of] small balances will obviously start to see those fall off.

“We probably will see a bit more of a divide between the larger funds and the smaller funds,” he added.

Lost account clean-up hits super membership

Super fund membership has dropped for the first year in Australia’s superannuation history, with numbers to continue dwindling over the next 12 to 18 months, according to SuperRatings.

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