A guide to eligible rollover funds and how they work.
An eligible rollover fund (ERF) is a type of account that holds funds from inactive or low balance super fund accounts. This can occur when a member opens an account with a new super fund but does not roll over funds from their previous account into the new one. Similarly, the account may be considered inactive when no more contributions are being made to it.
In such cases, the super fund will transfer the funds into an ERF. Alternatively, they may have a nominated rollover fund. By law, super funds must nominate an ERF for such instances. It's also important to note that ERFs are registered with Australian Prudential Regulation Authority (APRA).
As a temporary holding account, ERFs generally expect people to claim these funds and eventually roll it over to their new super account.
How does an ERF work?
While the purpose of an ERF is to keep funds in one place until it is claimed or transferred into another super account, there are still admin fees associated with keeping the account open. Each ERF has different features, however, no more contributions can be made to it.
What happens when you leave your job?
Leaving or changing jobs will impact your super. In such instances, there are a number of things you can do:
- Continue contributing to the same super fund. If you choose to keep your membership with your current super fund, you must provide your member details to your new employer. In this case, you do not have to do anything until you have details of your new employer and can supply your employer with your super details. Once your employer receives these details, your super contributions will be paid into this account.
- Open a new super account and roll all your super into this account. Some employers give you the option to join their default super fund. While you can continue to keep your super in different super funds, rolling all your super into one account could be beneficial. If you choose to go with your new employer's default super fund, your employer will be able to open a new account for you. Tip: once you receive your new super fund details, you can roll over your current superannuation into this fund to avoid any fees and loss associated with keeping your other account open.
What are some of the risks of an ERF?
Some risks to think about when your funds are kept in an ERF include potential low investment returns and ongoing fees. If your previous employer also had a 'employer-sponsored division' set up for the super fund, you may no longer benefit from these features as you are no longer an employee.
Typically the employer-sponsored division applies when employees stay with the company.
What are the benefits of ERFs?
There are a few benefits of having a rollover fund for your super, including:
- Consolidated member benefits. Account balances (even small amounts) and rollovers from other trustees are accepted.
- Continued investment of your funds. Although there may be defensive investment strategies employed, ERFs continue to invest your funds which could reduce loss associated with inactive accounts.
What’s the typical profile of someone who needs an ERF?
There are certain types of individuals who are suited to apply for an ERF:
- People who are looking for a new super fund to roll their money into, particularly if they are in between jobs.
- People who want a safe but secure eligible rollover fund.
The fees associated with ERFs include administration fees and/or indirect costs. Administration fees differ from one EFR to another and cover the cost of keeping the account while indirect costs covers investment costs. Indirect costs could be charged as a percentage of your asset benefits or your balance.Back to top
Who can apply for an ERF?
All super funds are required by law to nominate an ERF to hold the balances of their lost or ineligible members. So if you lose your super, your funds will automatically be transferred into an ERF by law so you don’t lose your money.
Questions you've always wanted to ask
How does superannuation become lost?
When a super fund loses contact with a member, the Fund may transfer the member’s super funds to an ERF. A member becomes “lost” if the Fund has been unable to make contact with them for a specified period of time. This can happen if you’ve switched jobs, moved house, or changed your name and forgotten to tell your super fund.
I think that I have “lost” super but can’t find it with the ATO - what should I do?
If you believe you have lost super but can’t find it on the Australian Taxation Office (ATO) searches, you should first ensure you are using the details that were current at the time you lost your super:
- If your name has changed, you might try searching using your old name.
- If you still can’t find your super, try to find any old statements from your previous fund and then contact them directly. They may not know that they have out-of-date details.
- If you're not sure which super fund your previous employer used, at the very least, you should contact someone from your previous workplace to find out the name of the super fund. This means you can call the super fund directly and ask about any funds you may have with them.
What is unclaimed super?
Super accounts are often parked in an ERF because they are “inactive”. Accounts become inactive because contributions are no longer being sent to the account. This might occur because a member has:
- Changed jobs and a new super account has been opened in another super fund.
- Gone overseas to live.
- Become unemployed.
- Changed name and opened a new account.
- Gone on maternity leave.
- Gone on study leave.
- Become self-employed and ceased making contributions.
- Ceased employment temporarily or permanently due to age, disability or other reason.