THE Federal Government is banking billions of dollars of workers’ superannuation even though it has all the information it needs to return the money to rightful owners.
Super funds have urged Treasurer Scott Morrison to change the law to force the Australian Taxation Office to use data it has on record to proactively pay unclaimed money into active accounts, rather than waiting for holders to ask for their cash back.
The push comes as new figures show the owners of lost super are missing out on thousands of dollars each in investment earnings while the Government has their accounts.
Treasury trousered $220 million on January 1 when, for the first time, lost super accounts with less than $6000 had to be transferred to the Australian Taxation Office (ATO). The ATO was already holding more than four million small unclaimed accounts containing a combined $2.5 billion after a series of increases in the threshold from $200 in 2012 to $4000 by the start of 2016.
“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,” said the Association of Superannuation Funds of Australia CEO Martin Fahy.
ASFA has put the proposal to the Treasurer as he prepares the May Federal Budget.
Other groups also say too little is being done to reunite super with owners.
“More needs to be done by the Government and the ATO to inform people that they do have lost super out there,” said Tax and Super Australia technical services manager Andy Nguyen.
Unclaimed super transferred to the ATO is protected from fee erosion but does not generate investment earnings. It only grows by the rate of inflation. This is likely to cost the owner thousands of dollars.
Analysis for News Corp Australia by REST Super suggests a $6000 account in government hands would be worth $7600 after a decade compared to $11,100 if it was accruing investment returns in an active fund — a difference of about $3500. In percentage terms, the government-held account would have grown by 27 per cent, versus 85 per cent had it been in an active fund.
An ASFA survey found more than 60 per cent of people “strongly agree” dormant super accounts should be consolidated into a person’s active super fund rather than going to the ATO.
“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,” ASFA’s Dr Fahy said.
“It would also benefit young people who regularly move jobs yet fail to take their super balances with them to their new fund.
“The holding of tax file numbers and other identifying information in regard to most superannuation accounts makes it relatively easy for the Commissioner of Taxation to match lost member account owners with their current active superannuation accounts,” he said.
Revenue and Financial Services Minister Kelly O’Dwyer said the Government would consider the ASFA proposal.
It remains unclear why the Government treats unclaimed super as revenue, given rightful owners can take back the money at any time.
Kirsty Shiel recently began consolidating her super after moving back to Australia. When she contacted the fund connected to her first-ever job, she was told her savings had been sent to the ATO following a law change.