Australia’s peak superannuation body, the Association of Superannuation Funds of Australia (ASFA), is calling on the Commonwealth Government to amend the law to enable the Commissioner of Taxation to reunite Australians with millions of dollars in unclaimed super.
In a pre-budget submission ASFA said active repatriation of accounts held by the Australian Taxation Office (ATO) would be consistent with the policy objective of reducing unnecessary accounts within the superannuation system and boosting the retirement savings of Australians.
ASFA CEO Dr Martin Fahy said an estimated $2.5 billion in more than four million accounts currently sits in consolidated revenue as unclaimed super.
“One way to greatly improve the system is to have the ATO, which has the necessary capacity and identifying information, to return unclaimed funds currently captured by legislated threshold transfers,” he said.
The threshold at which super funds must transfer inactive accounts to the ATO rose to $6,000 on 31 December 2016, capturing as estimated additional 100,000 accounts worth approximately $220 million in total.
“There would be no Australian rejecting the return of their hard earned funds, particularly when consolidation into an active account could mean thousands extra in retirement,” Dr Fahy said.
“Recent changes to superannuation reporting requirements have enhanced the level of information held by the ATO about super accounts.
“This means the government could amend the Superannuation (Unclaimed Money and Lost Members) Act 1999 to permit the Commissioner of Taxation to pay unclaimed money to an individual’s current active superannuation account.
“The holding of Tax File Numbers and other identifying information in regard to most superannuation accounts makes it relatively easy for the Commissioner to match lost member account owners with their current active superannuation accounts.
“The ATO holds address details and also can make use of emails through the MyGov website to ensure a member is advised of the transfer.
“A move to place the responsibility on the ATO to reunite lost accounts with their true owners would be welcomed by consumers, many of whom struggle with the complexity of super. It would also benefit young people who regularly move jobs yet fail to take their super balances with them to their new fund.”
For a person who has a $5,000 account taken by the ATO this means a loss of around $225 a year in earnings on average compared to what they would receive if that account was consolidated into their active super account.
If a 25 year old with $4,000 superannuation from various part time jobs while studying had that money held by the ATO as unclaimed super, moving it back into their active super account would lead to their superannuation balance at age 65 being $14,640 higher in terms of today’s dollars.
For a 45 year old woman with $5,000 of superannuation held by the ATO as a result of part-time and casual work while having time off from full-time work for family reasons, moving it back to their active superannuation account would boost their balance at retirement by $9,550 in today’s dollars.
“Fund members with missing or lost accounts are more likely to generate earnings with their balance in a super fund, rather than with the ATO, where balances only attract interest at a current rate of 1.5 per cent per year,” Dr Fahy said.
Consumer research commissioned by ASFA showed 61.2 per cent of 1,000 people surveyed in October last year strongly agree inactive/dormant super fund accounts should be consolidated into a person’s active superannuation account rather than going to the ATO as unclaimed superannuation.
Understanding the difference between lost and missing super and unclaimed super
An estimated $2.5 billion in more than four million accounts currently sits in consolidated revenue as unclaimed super.
This is part of a grand total of more than $14 billion in 5.7 million lost and missing, as well as ATO held unclaimed accounts.
At 30 June 2016 more than 14.8 million Australians had superannuation.
Having so many unclaimed, as well as lost and missing accounts, significantly reduces the efficacy of the super system.
Lost and ATO-held super
Lost uncontactable and lost inactive accounts are still held by super funds, whereas unclaimed super money is held by the ATO.
For further information, please contact:
Teresa Mullan, Media Manager, 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. ASFA’s mission is to continuously improve the superannuation system so people can live in retirement with increasing prosperity. We focus on the issues that affect the entire superannuation system and represent more than 90 per cent of the 14.8 million Australians with superannuation.