The nation’s biggest superannuation fund, AustralianSuper, is set to return around $2 million to members affected by what it is calling a “credit rating error”. This is the second administrative mix-up that has surfaced at AustralianSuper in recent months.
The latest error affects members invested in AustralianSuper’s Australian Shares option and deals with misapplied franking credits applied to those accounts in June last year. It’s estimated around 6800 members are affected.
The error took place over a period of 21 days between 2 and 23 June 2022. It appears a franking credit that was due during this period was not credited to members’ accounts.
A franking credit is designed to prevent double taxation on corporate income but had somehow been overlooked in this instance.
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The company acknowledged the slip, stating that “after a review, the oversight of franking credits has been enhanced and is [now] monitored regularly.”
The median remuneration per person was $26.42, but some members were out of pocket by as much as $400. AustralianSuper has promised its members that the lost amounts are being credited back to their accounts as a matter of urgency.
The troubling incident is the second to befall AustralianSuper this year, after the company pledged in May to reimburse $70 million it had charged 100,000 member accounts. In that case, AustralianSuper had failed to observe those members had multiple accounts.
At the time, AustralianSuper said it “regularly identifies and combines multiple accounts held by a single member to help those members avoid extra fees” and that it failed to identify all instances of multiple member accounts.
The massive $300 billion super fund ended the 2023 fiscal year on an upbeat note, delivering an 8.22 per cent return rate for its balanced investment option.
While that provides solace, current members are left hoping that such administrative errors are an anomaly rather than a recurring theme. It underscores the need for constant vigilance in dealing with financial matters – especially when they pertain to hard-earned retirement funds.
In July year, the superannuation guarantee (SG) rose to 11 per cent per annum, still climbing in 0.5 per cent increments towards its eventual target of 12 per cent by July 2025.
Mano Mohankumar, senior investment research manager at Chant West, says super funds have had to weather some unprecedented economic circumstances in the form of the pandemic and record inflation.
“In the past four financial years, financial markets have dealt firstly with the challenges of the COVID crisis, followed soon after by a period of rapidly rising inflation which central banks combatted by aggressively raising interest rates,” he says.
“It’s been an incredibly challenging time, yet one that highlights the resilience of super funds’ investment portfolios. They’ve shown their ability to limit the damage when markets are weak but still capture substantial upside when markets perform strongly.
“The FY23 result is a reward for fund members who have remained patient and maintained a long-term focus.”
Are you with AustralianSuper? Are you affected by these incidents? Let us know in the comments section below.
Also read: Concerns raised about proposed changes to superannuation advice
