BATTLETOGET
A REFUND
It’sa little-knownfactthatyou
canwithdrawyoursuperbalance
if it is lessthan$200andyouremploy-
menthasbeenterminated.Thistakes
intoaccountthefateofsmallaccount
balances,whicharedecimatedbyfees.
SusanHill*,19,foundherindustry
fundunresponsivewhensherequested
a refundonhersuperguarantee.She
hadworkedatherfirstcasualjobover
theChristmasperiodbeforestarting
a universitydegree.
Aftercheckinghersuperaccountin
February,shenoticedhermodestSG
contributionof$53wasshrinkingdue
toa $10deductionforinsurance,$1.30
perweekforadministration,plusan
investmentfeeof0.1%.Contributions
taxof15%hadalsobeendeducted.
Afterherfund’scallcentresaidthere
wasnothingit coulddotohelpher,she
calledtheAustralianFinancialCom-
plaintsAuthority.“I establishedthat
superfundsareabletorefundthe
SGtothememberif thetotalbalance
is lessthan$200,”saysHill.
Afterquotingtheruletomoresenior
staffandmakingit clearshewasstudy-
ingfulltime,notworking,andhada ter-
minationletterfromheremployer,her
insurancepremiumwasrefunded.
Butthefundheldontotherestofher
moneywitha grimdetermination.
“Fora studentwhoisn’tworking,
everydollarcounts,”saysHill.“Allthe
ongoingfeesmeanthecompulsory
contributionwillquicklydwindle
tozero.”ShewelcomestheJuly 1
reformstoprotectsmallaccounts.
“Thatwillbefairertostudentslike
mewhowereChristmascasualsbut
notcurrentlyworking.I don’tthink
compulsorysupershoulddisadvantage
usbecausefeesandcommissionsare
beingunreasonablytaken.”
Notonlyshouldhersuperfundhave
refundedherentireamount,nocontri-
butiontaxis payableonanyrefundyou
receiveona balanceunder$200.
Fordetails,seeato.gov.au/individuals/
super/withdrawing-and-using-your-su-
per/Early-access-to-your-super/?=redi-
rected_early-release#Superlessthan200.
*Namehasbeenchangedatthecase
study’srequest.PROTECT YOUR
PACKAGE
From July 1, a super
account classified as
having a low balance- that is, one with less
than $6000 in it – will
have fees capped at
3% to stop the savings
from being eroded.
Accounts that
have not received a
contribution for 16
months, have balances
below $6000 and
show no sign of any
member activity,
such as investment or
insurance changes,
will be transferred
to the tax office.
The ATO will auto-
consolidate dormant
accounts and reunite
them with a member’s
active account if it
can identify one.
This underlines the
importance of always
giving your super fund
your tax file number.
“There’s also
some protection
around insurance
so students and
young workers don’t
end up with zombie
insurance policies they
don’t require,” says
Andriessen. “Members
under 25 will have to
opt into insurance
rather than opt out.”
See moneysmart.
gov.au/
superannuation-
and-retirement/how-
super-works.
into a preferred default account.
They should also ensure they are
being paid the correct amount.
“Recognising the amounts that
are contributed in the early days will
have a huge impact on what will be
there at the end of your working life
because of the effect of compounding.
It matters even more than how the
money is invested,” he says.
Adrian Raftery, associate pro-
fessor in superannuation at Deakin
University and course director of
financial planning, says the cap
to stop fees from eroding small
balances and making insurance
an opt-in rather than opt-out is a
welcome improvement.
“You don’t need to have insurance
if you are under 25. However, if you
do have commitments, if you do get
married young, or have kids young, or
have taken out a mortgage or do risky
work or risky sports, then I would
encourage you to have insurance.
There’s a lot of tradies out there and
they are not adequately covered.”
In terms of long-term savings,
Raftery says super really works.
“Super is a long-term asset. The
earlier you can start putting money
into super the better it is. If the
student were to ask their parents
what they would do differently
when it comes to super, many
would say they wished they had
started putting money into super
much earlier.
“Take advantage of the super
co-contribution. If you put $1000
post tax into your super, you will
get $500 from the government.
That gives you a 50% return auto-
matically. Do that every year and
it mounts up if you earn less than
$37,000 a year,” he says.
If you do change jobs, roll over
your super straightaway. If you
change your address, notify your
super fund and make sure your
fund has your tax file number.
Once you start earning a lot more
and your degree has paid off, Raftery
says super’s tax concessions really
take off. “I’d be encouraging [young
workers] to start taking advantage of
the favourable tax concessions around
super. They’re really fantastic.” MCASE
STUDY