18 August 2016
Lost super and related insurance benefits must be fixed: ASFA
The ATO’s release of the latest lost super figures highlight the enormous impact that the government’s lost super threshold is having on the retirement nest eggs and insurance benefits of Australians, the Association of Superannuation Funds of Australia (ASFA) said today.
“With nearly $12 billion sitting in lost superannuation accounts, I encourage all Australians to go online and use the myGov website tools”, said Jim Minto, ASFA interim CEO.
“It’s simple to do and your future self will thank you because the more you have in super today, the better your retirement income will be given the power of compound returns.”
ASFA says that every dollar you find and put into your superannuation before age 35 could mean up to seven extra dollars of super savings in retirement.
The aggregate amount of superannuation balances held by the ATO increased by around $470 million in 2015-16, mostly due to the increase in the threshold from $2,000 to $4,000 for compulsorily transferring accounts that came into effect on 31 December 2015. More than 130,000 extra accounts were transferred to the government.
The upper threshold at which lost and inactive super balances are transferred to the ATO is due to rise from $4,000 to $6,000 in December this year.
With such a large increase in the amount of money sitting with the ATO, ASFA is renewing its call for the government to revisit the threshold levels at which people’s super is transferred to the ATO.
“ASFA has been concerned that increasing the threshold will deprive many Australians of valuable insurance benefits, without their permission,” said Mr Minto.
“The compulsory removal ‘in effect’ of these insurance benefits creates a large risk for the government and taxpayers.
“Industry estimates indicate that around 50% of inactive accounts in both the $2,000 to $4,000 and $4,000 to $6,000 balance ranges have insurance cover.
“We are also concerned about investment earnings for fund members. Those fund members with account balances over $4,000 are more likely to generate greater earnings if their balance sits within a super fund than with the ATO, thus delivering a better income in retirement.
“Up to 100,000 additional accounts might be affected by the increase in the upper threshold to $6,000 and we think these people should be able to hang on to their own money,” concluded Mr Minto.
For more information, visit our Super Guru website:
For further information, please contact:
Katrina Horrobin, 0451 949 300.
ASFA is the peak policy, research and advocacy body for Australia’s superannuation industry. It is a not-for-profit, sector-neutral, and non-party political national organisation, which aims to advance effective retirement outcomes for members of funds through research, advocacy and the development of policy and industry best practice. For more information visit www.superannuation.asn.au