Retirement
You don’t want your fund to get this wrong
It’s easy to fix but if savers don’t know where to look, this mistake can cascade and become “very expensive”.
You don’t want your fund to get this wrong
It’s easy to fix but if savers don’t know where to look, this mistake can cascade and become “very expensive”.
It’s not endemic in any organisation, but administrative errors are prevalent in most superannuation funds and can have untold consequences, the principal consultant at QMV, Jonathan Steffanoni, said at a media briefing in Sydney on Tuesday.
For example, if you, your superannuation fund or your employer gets your date of birth wrong, you could pay higher insurance fees and receive a different level of cover.
“That cascades if you've got asset-based fees. Get your premiums wrong, there's your asset balances wrong,” he said.
That’s in addition to ramifications around eligibility to draw down funds
“You get this cascading effect where things get really complicated to fix and the longer it takes to fix [the more expensive it becomes],” Mr Steffanoni said.
He said it’s not just super funds that can slip up in this area as employers can also make accidents, or deliberately cut corners in some instances.
“In the super context, the controls aren't necessarily mature and strong enough at ensuring that data coming from employers is accurate despite the expectation that it is,” Mr Steffanoni explained.
“A dummy date of birth is something that's often used by employers that have a transient workforce. They might cut corners. If you do the analytics on a lot of databases, you will see atypical spikes for some.”
The good news is that it’s easy for savers to check their fund has it right, he added. Touch-points like statements or online portals are good places to start.
It’s also an important step for members to take.
QMV managing director Mark Vaughan added, “If identified early the remediation cost is minimal. However, if the error is not identified for a month or more, it can filter into monthly processes, and may impact investors who may have left or transferred products – such as from super phase to pension phase.
“If left unchecked, the error can affect annual processes such as member statement and ATO and APRA reporting. In this case it may be considered a breach, and will be expensive to remedy, not to mention to negative impact it has on the fund member.”
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