The Association of Superannuation Funds of Australia (ASFA) has today released a new research paper which estimates the number of unwanted multiple accounts in the system and what the costs of that are for fund members. The paper also tracks the massive reduction in the number of multiple accounts in recent years.
In this context ASFA commends the variety of government policy initiatives and actions taken by funds which have helped to reduce the total number of lost and inactive super accounts.
“A combined effort from government and industry to tackle unwanted multiple accounts in the system has reduced the number of lost and inactive super accounts by 13 million since 2015," said ASFA Deputy CEO Glen McCrea.
The number of multiple accounts is likely to fall by a further 500,000 when “stapling” of existing superannuation accounts - when employees start a new job—comes into effect.
ASFA forecasts around 2.5 million unwanted multiple accounts will remain in superannuation funds by June 2022, leading to additional aggregate costs in the system of around $100 million a year.
Despite the significant reduction in multiple accounts, the number of lost and inactive accounts held by the Australian Tax Office (ATO) has remained stagnant, at around 5 million accounts, despite a large flow of superannuation accounts into and out of the ATO.
“There is more work to be done to reduce the number of multiple accounts and to address the $3.6 billion in lost and unclaimed super which currently sits with the ATO.”
ASFA recommends that the ATO reunite amounts it holds whenever it can identify another account in a superannuation fund, including inactive accounts, where the combined balance will be above $6,000.
In many cases the ATO can match such accounts to a super account held by an individual, but the law only allows the ATO to forward a balance when the superannuation account proper is classified as active.
The ATO applies an interest rate to the balances it holds which is equivalent to the increase in the Consumer Price Index (CPI), or 1.1 per cent in the 12 months to March 2021. In contrast, the average investment return of superannuation funds is around 7 per cent per year, with the year to June 2021 returning an extraordinary 20 per cent.
“ASFA estimates that superannuants stood to earn investment returns in the order of $700 million in the past year if the $3.6 billion ATO-held balances were reunited with active accounts,” concluded Mr McCrea.
ASFA looks forward to continued collaboration with government to further reduce the number of unwanted multiple accounts in the system.
For further information, please contact:
Jacqui Maddock, 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 all Australians can enjoy a comfortable and dignified retirement.
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