It can be frustrating to have money sitting in super, only to have it eaten away by fees and charges over time. But that's about to change.
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From July 1 2019, the new Protecting Your Super Package (PYSP) will kick in to protect our super savings from the impact of inappropriate fees and unnecessary insurance premiums.
A key aspect of PYSP is that you'll pay no exit fee switching your super from one fund to another. Exit fees on super have typically been small, but can be a deterrent to switching for small balances.
Also from July 1, fees on super accounts with balances below $6000 will be capped at three per cent annually. This should help prevent smaller balances being gobbled up by high fees.
Super balances under $6000 that are inactive (received no contributions for at least 16 months), will be handed over to the Tax Office which can use your tax file number to merge any dormant accounts with your main super fund, reducing the $17.5 billion pool of lost and unclaimed super.
Possibly the most dramatic change of PYSP is the 'opt in' arrangements for life insurance.
If you have an inactive account, your super fund should be in touch to let you know that any life cover you have through the fund is about to end.
It's a step in the right direction because you could be paying for default life insurance without realising it.
Yet the premiums can steadily whittle away your super savings especially if there are no contributions coming in.
You can opt to keep life cover in place and if you have a family or high personal debts, life cover through super makes sense.
Investment watchdog ASIC, is warning super funds not to encourage members to hang onto inactive funds or maintain insurance in funds that aren't their main account.
