There are very few benefits to having more than one superannuation fund, yet for around two in five Australians, this is the case. In fact, just under half of those members with multiple accounts are no longer contributing to at least one of their funds. In other words, hundreds of thousands of accounts are sitting there, dormant, while administration and investment management fees are deducted from them.

The drivers of dormancy vary broadly, however by far the biggest reason for halting contributions is change of employment, adding further weight to the notion that people are not sufficiently engaged with their super. Dormant members are significantly more likely to have changed employer in the last 10 years, or be not working at all, compared to active members, according to recent research by CoreData on dormant superannuation members. There are no logical grounds for automatically signing up to the new employer’s default fund, unless, of course, the employee weighs up the benefits of the new fund versus the existing fund and deems the new employer’s default option the best fund for them.

But the reality is; most of us don’t make an active choice when it comes to our superannuation. Two thirds of Australians (64.6 per cent) did not select their main fund themselves, rather than allowing their employer to select their fund for them. The study, which covered almost 600 Australians aged 18 and above, assessed the drivers of dormancy, barriers to consolidation and methods for increasing member engagement. There’s a common misconception out there that the major barrier to consolidating super accounts is the difficulty of the process itself. While it might be true that consolidation – especially when dealing with both industry and retail funds – can be slow and sometimes painful, the real hurdle is far more personal.

Inertia wins the day

The overwhelming reason for lack of consolidation is the member’s own inertia. When asked why they remained a member of their dormant fund rather than closing the account, the majority (51 per cent) either couldn’t be bothered to close the account (14.9 per cent ) or had not got around to it yet (36.1 per cent ). Only 28.1 per cent said they remained a member because they might possibly use the account in the future, while 10.0 per cent said they did not know how to close the account.

The qualitative element to the research found that although most people understood that having more than one account meant they were paying multiple layers of fees, and that it would be more cost-effective to consolidate their accounts with a preferred provider, they still hadn’t done so. A few people believed that having more than one super fund meant they were better diversified, so clearly in some cases it is poor knowledge and understanding rather than apathy that’s influencing behaviour.

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