The Association of Superannuation Funds of Australia (ASFA) has called on the Government to make it easier for the ATO to pay back unclaimed superannuation.
In their 2017/18 pre-Budget submission, ASFA says the Government should give the ATO the power to pay unclaimed superannuation to a complying super fund when the ATO is satisfied that super belongs to a particular person.
ASFA CEO Dr Martin Fahy said there is an estimated $2.7 billion sitting in government consolidated revenue as unclaimed super.
As recently as December 2012 the threshold below which unclaimed superannuation was sent to the ATO was $200. However this was increased to $2,000, then $4,000, and on 1 January 2017 the threshold increased to $6,000. ASFA estimates this last increase captures an additional $220 million in superannuation, across 100,000 accounts.
“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,” 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.”
Dr Fahy said the identifying information held by the ATO and super funds would make it “relatively easy” for the ATO to match lost member accounts and with active super fund accounts.
“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,” he said.
ASFA says this would be consistent with the policy objective of reducing unnecessary superannuation account and boosting retirement savings.
“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,” said Dr Fahy.
The ASFA pre-Budget submission also said that any further substantive changes to superannuation or the age pension should only be made after a “holistic consideration” of retirement incomes policy.
“Given the substantial changes to the taxation of superannuation and the provision of the Age Pension in recent years, including in the 2013–14, 2014–15 and 2016–17 Budgets, ASFA considers there should now be a period of consolidation to allow the various changes to be bedded down,” said the ASFA submission.