What Is The Point of Super When It Can Easily be lost

zine21 on 16/03/2017 - 20:48
Last edited 16/03/2017 - 20:51

Full disclosure : I know very little about super.

I worked for a large company, part time, while I was studying (and full time during summer and winter breaks). They paid me well and they paid for my super. Through this I accumulated well over 6k in super. I remember I received letters from them regarding my balance regularly.

For a few years I just stopped paying attention to my super until last week. I received a letter from them that basically says I have $0.5 in closing balance.

Ive been told that they invest the super and it can either go up or down. I just didnt realize that they could lose all of it. I mean if this is how it works, how does one ever build any retirement value when it can be lost so easily ?.

Am I missing something ? do people normally get involved in how super is invested to ensure its not lost.

Financial

Comments

  • [Deactivated] on 16/03/2017 - 21:05
    +4

    That's not normal. $1000 might get consumed in fees but $6000 in a growth fund even during the GFC shouldn't disappear. Definitely investigate. Was it your employer's self managed fund?

    • Boshait on 17/03/2017 - 12:05
      +6

      Many funds automatically sign you up for life, disability and income protection insurance. The monthly premiums will typically be greater than the returns on a sub 10k balance.

  • indium on 16/03/2017 - 21:08
    +1

    The investment is supposed to be across a range of different assets and industries (shares, property, cash etc) that help to diversify and protect against your super depreciating.

    I highly doubt they could have lost money in investments over the past few years but it sounds like they have chewed through your money with fees. They may have been charging a percentage admin fee based on how much money you had and also possibly charging you for life insurance or something similar.

    • zine21 on 16/03/2017 - 21:30

      could they just charge me for random fees and eat up everything without my agreement ? I mean whats the point of even having this shit if this is how they behave

      • mskeggs on 16/03/2017 - 21:39

        No they cannot.

      • indium on 16/03/2017 - 21:56

        Not sure but REST superannuation automatically signed me up to insurance and just had another look at their insurance page and it says they will also reinstate the insurance automatically when you turn 25 even if you previously opted out of it.

        • Scrooge McDuck on 16/03/2017 - 22:31
          +1

          Every super account I've come across has come with gratuitous "insurance" policies by default.

          You have to contact them to opt out.

          Yes, it's absurd!

      • Kunalk222 on 24/04/2017 - 13:31
        -1

        were you still depositing money into it regularly??? looks like they must have lost % of it and signed you up for insurance etc. which eats money as well on top of your admin fees

  • captobvious on 16/03/2017 - 21:26
    +4

    depends on the investment strategy you may or maynot have chosen. if the fees are more than the roi then yeah you could chew through what was left.

    maybe this happened too
    No TFN: More tax on concessional contributions. If your super fund doesn’t have your TFN, then your employer’s Superannuation Guarantee contributions, and any other concessional (before-tax) contributions, are subject to 49% (top marginal tax rate plus Medicare levy) rather than 15%. If you’re eligible to claim tax deductions for your super contributions, and your super fund doesn’t have your TFN, then expect the same tax hit.
    No TFN: Forget about non-concessional contributions. You cannot make non-concessional (after-tax) contributions unless your super fund has your TFN.
    No TFN: Forget about receiving the co-contribution. If your super fund doesn’t have your TFN, then you cannot make non-concessional contributions which means that you cannot participate in the co-contribution scheme. You can read about the co-contribution scheme in the SuperGuide article Cashing in on the co-contribution rules (2016/2017 year).
    No TFN: Forget about receiving the Low Income Super Contribution. Since 1 July 2012, if you earn less than $37,000 a year and you or your employer make concessional (before-tax) contributions to your super fund, then the federal government will pay up to $500 per financial year into your super fund. This payment is to ensure that you’re not worse off tax-wise by having money paid into a super account. If your super fund doesn’t have your TFN, you won’t get a cent. For more information on the LISC see article Super tax refund for lower-income earners to extend beyond 30 June 201https://www.superguide.com.au/boost-your-superannuation/save-tax-supply-tfn-to-your-super-fund7.

  • RobVH on 16/03/2017 - 21:33

    If I was to hazard a guess, upon taking out your super, they perhaps by default take out income protection insurance or death insurance in your super policy at $x per year, and as you haven't had any further additions to the fund it would have dwindled away.

  • the cheeky dropbear on 16/03/2017 - 21:45
    +1

    Should've paid greater attention to your super, so chalk it up as as lesson. Don't worry, I learnt the hard way as well; was paying for TPD insurance which I didn't see the need for.

    A bit curious to know how you ended up with $0.5, so maybe check your hard copy transaction statements or your transaction history online to see what fees and premiums were paid over the years? Not to mention your investment returns as well.

    • zine21 on 16/03/2017 - 21:51

      I wasnt concerned because it accumulated during study years and I didnt really care at the time so I guess I'm at fault. But now I'm working full time and I kind of started worrying that they could invest and lose everything in a similar way down the line, leaving me nothing to work with.

    • Scrooge McDuck on 16/03/2017 - 22:34
      -1

      A bit curious to know how you ended up with $0.5,

      50 cent a lot of money!

  • chumlee on 16/03/2017 - 21:47
    +2

    Go back and check through your statements and see where it went and make sure your employer paid the super

  • mskeggs on 16/03/2017 - 21:49
    +3

    It is wildly unlikely that your super is either missing or reduced in value from $6000 to $0.50.
    It is likely that you got a statement from Supertrace saying they found an old lost account from when you were a teenager and picked up some part time work showing a balance that is very low.
    Alternatively, you might have rolled the $6k super balance over to another fund when you changed employer, but after that date the fund corrected an error leaving a trivial balance. I have one account with $12 in it because I haven't the time to correct the error that lead to it, and roll it over to my active account, but it continues to annoy me.
    Check that the letter you received last week is from the same fund as the past $6k, and check the account number is the same.
    If it is, log on and check the transactions on the account, or call them and ask what the transaction records show.

    All funds will have thorough records available showing you precisely what fees and charges were applied, and what the investment performance was. You don't have to be unsure, as they are obligated to give you full information.

    • zine21 on 16/03/2017 - 21:57

      Thanks. The letter is definitely from the same super company that the 6k was in. Its not from supertrace and the way it looks is that its been 0.5 for a year at least as it has several values outlined for the past year and its all 0-0.5 written on them.

      I wasn't working for the last 2 yrs of uni so I didn't have anything going into it. I have started with a new super/job now but it hasn't been that long so I doubt it was transferred but I'll follow it up. I was more scared that Im going to end up losing all of the super 20-30 yrs down the line (if you lose it now you can lose it later - especially with how bad my luck is).

      • mskeggs on 16/03/2017 - 22:07
        +2

        If the fund was inactive for more than 12 months and had a balance under $4k it will be transferred to the ATO under their lost super program.

        For your piece of mind, the super system has a bunch of issues, but it is generally set up to protect people from careless investments or unfair fees. If you did not specifically select an investment, you will have had your funds invested in the default investment option. I'm not aware of any default investment option that hasn't grown in the last 5 years, and if any had gone to zero it would have been in the newspaper as big news.
        Even the most extortionate funds charge less than 3% in fees, so the fees can't have destroyed the balance.
        You might have instructed the fund to increase your life insurance or income protection insurance to a very high level, and those policies would be coming out of your fund (only when active? not sure) but again, it seems unlikely.

        Give the fund a call in the morning and ask where the money went.

  • plmko on 16/03/2017 - 22:23

    Err…by default Super has a 'balanced' portfolio that mirrors the Australian economy, which means it would be impossible for you to lose since it as a fact the Australian economy has grown albeit slowly.

    I would say you got automatically signed up for income insurance and your balance hasn't accumulated enough to cover those fees. It is normal for this to be $700+ a year.

  • Scrooge McDuck on 16/03/2017 - 22:28
    +1

    Aaand it's gone!

  • CyberMurning on 16/03/2017 - 23:06

    Not possible. Just call and ask.

  • outlander on 16/03/2017 - 23:10
    -4

    That is the point. What, you thought super was invented to help people? The leaders of this country and the world are not your father. They don't care about 'preserving your lifestyle' as you get into your twilight years. Or if they are your father, they're your step-father, who has other kids from another marriage and wants to take control of all your mothers assets so that when she dies he can leave them to his biological children and screw you out of your inheritance

    With the opt-out insurance and management fees, it is entirely possible to lose that kind of money.

    • robbyjones on 17/03/2017 - 08:19
      +4

      If you try a little harder you could probably be a bit more offensive.

      • outlander on 17/03/2017 - 14:13

        Well I could have added that the people in charge aren't bad, just insecure in their position. If everything were free, the vast majority of them would want you to be happy. But life isn't free, and every dollar you give away is a dollar you don't have for use. Every dollar you fail to steal is an opportunity for an opponent to steal and use the wealth to attack you and take your position. So leaders are forced to act aggressively to secure their power, but even so they feel guilty over bringing suffering to the lives of innocent people. In order to relieve that guilt they do some mental gymnastics to convince everyone else that the victims deserve it, or that it's not a big deal and they'll bounce back. Maybe they were stupid (because the stupid always deserve to ground down into the dust right?) or forgetful or lazy, or they would have wasted the money, or 100 other plausible things that dumb intelligent people might buy as justifiable.

        I could have said that, but that truth is hard for me even to swallow. Lot easier to spin the rhetoric of 'Government is a bad shady man in a trenchcoat making underhanded deals that steal my money' than 'The government is made up of people that are not so different to myself, faces that could belong to my grandma and grampa, yet will doom me to a life of pain and misery if it improves their chances of success even a tiny bit and then blame me for it'

        • robbyjones on 17/03/2017 - 21:18

          Oh dear, I don't even know where to start so probably best not to.

        • outlander on 17/03/2017 - 22:17

          @robbyjones:
          I know, it's a hard scenario to win under. I figure self improvement is the best option. Keep learning and an opportunity will present itself

        • StingyBritches on 17/03/2017 - 22:29
          +1

          @robbyjones:
          Yup. The Tin Foil hats are out today…

    • CandyMan on 17/03/2017 - 13:39

      The op will have to call lifeline after reading that

  • [Deactivated] on 16/03/2017 - 23:38
    +2

    Industry super funds are really good low fee options for young people. Do go to the effort of rolling over into one industry fund as your default, safe choice. (They also perform pretty well, actually)

  • ihbh on 17/03/2017 - 06:21

    Have a look at the letter in more detail, or call up the number on it and ask for more detail. There should be information (such as a bar chart) on how the balance changed yearly for the last couple of years, which will help inform you. If you can't understand it, scan it and remove personal detail and I, or the community might be able to help you interpret the details.

    Make sure you haven't mistaken it for projected insurance benefits.

  • DarkOz on 17/03/2017 - 07:46

    The Super I am in has online accounts which updates weekly. It also gives the balance over the last 5 years. Check if your Super allows you to do the same thing so you could check the transaction history.

    Your balance could shrink dramatically if it's low and you are not contributing:
    1. Admin fees.
    2. Investment loss.
    3. Insurances (Death and/or Total Disability)

    You could be paying for anything between $500 - $1000 for your insurances every year which could really eat into your balance.

  • StingyBritches on 17/03/2017 - 09:15

    "For a few years I just stopped paying attention to my super until last week"
    OP, surely you received a yearly statement for your income tax return? If so, didn't you read them?

  • iamw0man on 17/03/2017 - 09:32
    +2

    https://my.gov.au/

    Log in to/sign up for a mygov account and connect through there to the ATO services. Here you will be able to view all the super with your name on it. Sometimes funds are moved into a 'lost super' account due to inactivity, if this has happened, you will be able to see this here and roll it back into a super fund of your choice.

    EDIT: Just wanted to add that everyone should do this regularly, who knows where the super that you earnt from your first job went? It's good to keep an eye on it so you can consolidate to maximise your return. I check every now and then and had $400 turn up in a lost super account last week from who knows where, rolling over happens here with the click of a button for most funds too.

  • Seraphin7 on 17/03/2017 - 09:51

    There are a lot of possible scenarios here based on your original post. You need to speak with the super fund administrator in the first instance to get a detailed account of what has gone on.

    It seems rather unlikely that your balance would drop from $6k to nothing in a few years, although it is possible for a range of reasons. Only your super fund can explain this to you … any comments on here are no more than gratuitous opinions.

    On a general point, this does demonstrate the importance of monitoring your super from the moment you start working. In the not to distant future (some would argue its already here) we will have a society where your lifestyle in retirement will be determined by your superannuation balance and the income it derives. The days of just getting on the pension are basically gone.

  • CandyMan on 17/03/2017 - 13:45
    +1

    1. Most likely ur supper has veen transfered to the ato. Try finding your lost supper. If they didnt they probably broke the law and should compensate you

    2. If your super has online tools, sign up, log in, and then you can see history of contributions, investments, roi, and losses

    Good luck

    • CandyMan on 17/03/2017 - 13:46

      Actually super not supper

  • goodcopbadcop on 17/03/2017 - 14:35
    +1

    And going forward - you should have received a form that allows you to nominate the Superannuation Company where the super that your employer pays you, is sent. If you don't complete this form the super is placed into their default Superannuation Fund that they nominate. Some EBA's don't give you that choice admittedly and a default superannuation fund account is set up for everyone - however, you can roll over amounts (check the number of roll overs per year in your chosen super fund so that you do not get huge fees) - if the one that you choose has a better track record financially or you simply prefer all your money into that one.

    Do research on the top 10 Superannuation Funds that have made the best % gains in the share market averaged over the last five years. You can then determine once you are a member of yoru chosen super fund how you want your money invested - they usually stipulate where they invest - and will offer accounts eg "balanced" or growth or high growth; and a range of categories that will suit you depending on your age and your appetite for risk.

    No excuses these days for not checking on your balance as all the good companies will offer online tracking of your account. It is as precious as a bank balance - you just can't withdraw from it -but you don't want anyone else doing what they like with out you knowing.

  • mskeggs on 13/04/2017 - 17:30
    +1

    How did you get on?
    Was the balance transferred to the ATO?

  • Layla11 on 13/04/2017 - 19:47

    So to stop these fees that we have no idea they are taking

    What exactly are they so I can call them and tell them to stop it

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