'It's a cash cow': Sneaky fee catches out Kiwi living in Oz (2024)

Gen Hallot can still remember the disgust she felt when she realised she'd lost a small fortune in fees for something she never signed up for in the first place.

The 36-year-old New Zealander had spent an extended stint working in Australia, and after returning home, she "naively" left her superannuation ticking along in her account.

But when she eventually checked in five years later, she got a nasty surprise.

She'd been slugged with A$109 (NZ$120) monthly life insurance fees the whole time — something she's adamant she never opted for.

It added up to a staggering loss of more than A$5000 (NZ$5450) — meaning her super had shrunk instead of grown, with insurance fees eating away at an already low balance.

Hallot told news.com.au she "never explicitly asked for or agreed to" the fees, which were more than A$1000 (NZ$1090) per year.

She said she "never would have presumed" companies could "get away with taking fees" from clients without their permission.

"They say the law didn't require them to explicitly ask me if I wanted to continue my cover," she said.

"I asked them to log my complaint with the ombudsman — they said they would, I haven't heard anything.

"I was completely taken by surprise. I was extremely frustrated — these were my savings that a company seemed to have carte blanche to dip into."

But it didn't end there. Hallot quickly realised she needed to check her second superannuation account she had with another fund, from her waitressing days.

It was a similar story there as well — Hallot discovered she was being charged for yet another life policy she didn't want or need.

Now, Hallot is warning others to check their accounts to avoid being stung.

"It's a cash cow for these companies," she said.

"The practices are not in their clients' best interest."

But Hallot is far from alone. According to an analysis by comparison site finder.com.au, 3.5 million Australians could also be paying for life insurance without knowing it.

The research found that one in five — or 23 per cent — have no idea whether they have insurance through their super or not.

Insurance expert Bessie Hassan said superannuation members who were unsure whether they're paying for life insurance or not should contact their fund or check the most recent statement immediately.

"While some cover is better than no cover, often insurance through super is less comprehensive than a stand-alone policy," she said.

"It's not hard to accidentally opt in to life insurance when you sign up to a super fund, so ensure it's the right level of comprehensiveness."

But that estimate could be even higher — according to Australian Taxation Office data, 14.8 million Australians have a super fund account and around 40 per cent of those people have more than one.

With most accounts coming with default insurance policies, the number of Australians paying these fees could be astronomical.

Jessica Ellerm, the CEO of Australia's first crowd-powered superannuation platform, Zuper, said the A$2.6 trillion (NZ$2.6t) superannuation industry urgently needed a shake-up.

"Zuper aims to empower the millions of young Australians who have been ignored by the traditional superannuation industry," she said.

"For many Australians, super is their biggest and most powerful asset. It's a great unrecognised opportunity for them to use to grow their wealth outside of housing, and learn the basics of investing."

Zuper members are able to access a digital platform which will help consolidate their super funds, track their balance and deposits, top up, analyse their retirement forecasts and choose where their money is invested instead of having decisions made for them by the company.