Recent Changes In The Handling Of Lost Superannuation Funds
Author: Mia Cusack
As unbelievable as it sounds, millions of Australians have abandoned billions of dollars in superannuation funds. As of October 2010, there was $13 billion dollars in unclaimed superannuation. This precious money sits in abandoned superannuation fund accounts for years and can be slowly eaten away by management fees. The Federal Government made amendments to the law in 2009 that enabled them to collect this money.The Australian reported that in the five years after 2010, the Federal Government will collect $10 billion of this money. $300 million has already been collected from accounts of people who worked in the country but haven’t returned to Australia or claimed the funds in the past five years.
The then Minister for Superannuation and Corporate Law Nick Sherry announced in May 2009 that superannuation funds will be required by law to transfer to the Australian Taxation Office (ATO) the money of inactive accounts. Super funds whose records cannot properly identify account owners will also see these balances transferred to the government.
Other scenarios in which funds may betransferable are:
- If you have reached 65 and the super fund doesn’t received any money into your account for two years
- If a member of a superannuation fund dies, the account has been dormant for two years, and the person entitled to receive the deceased’s benefit cannot be contacted.
- Spouses are entitled to split superannuation balances when there is a divorce. If the superannuation fund is unable to ensure the money will be received by the ex-spouse and the fund has made reasonable effortsto contact the spouse for a period of time, the fund will then transfer the money to the government.
To some this may seem unfair, but the fact remains that the social security of retired Australians continues to be tenuous. Sherry stated that, “The revenue savings from these measures are designed to ensure that the retirement incomes system is equitable and sustainable over the long term.” This is as important as ever given the volatile market after the global recession of 2008, which saw governments around the world experience a sharp downturn in their revenue. It has been estimated that given the projected figures, the Australian Federal Government will see an increase of $238 million in revenue as a result of this initiative.
If you are one of the millions of Australians with lost super who may be affected by this change in the law, there’s no need to worry. Any unclaimed super that’s been rolled over to the government can be reclaimed at the Australian Taxation Office. There are no cut-off dates for doing this.
Superannuation experts largely agree that there will be a gap for most Australians between the amount they should save up for retirement and the money they will have in their super fund by the time they retire. It’s therefore wise to keep up with the latest legislation passed with regards to superannuationand to ensure you keep track of any unclaimed super accounts.