The Association of Superannuation Funds of Australia (ASFA) says the government’s increase to the lost superannuation threshold is having an “enormous impact” on the retirement savings and insurance benefits of Australians.
ASFA, pointing to recently released ATO data, says that superannuation held by the tax office increased by around $470 million in 2015/16, with 130,000 extra accounts transferred to the ATO. ASFA ascribes most of this rise to the increase in the lost super threshold from $2,000 to $4,000 from 31 December 2015. The threshold is legislated to increase again, to $6,000, from 31 December 2016.
“ASFA has been concerned that increasing the threshold will deprive many Australians of valuable insurance benefits, without their permission,” said ASFA interim CEO, Jim 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.”
“With nearly $12 billion sitting in lost superannuation accounts, I encourage all Australians to go online and use the myGov website tools”, said Mr Minto.