Superannuation fund members are being encouraged to use the 1 July, 2019 deadline as an opportunity to check the performance of their fund.
From 1 July, 2019, Protecting Your Super legislation would require super funds to report and pay inactive low-balance accounts to the Australian Tax Office (ATO). Where possible, the ATO would then proactively consolidate these inactive low-balance accounts into a member’s active account, on their behalf.
Super information portal SelectingSuper said this was an opportunity for individuals to review their super to ensure their superannuation money is consolidated into their account of choice and that it is performing well.
The best-performing fund in the market, it said, earned double the returns of the worst performing fund over the 10 years to June 2018. This meant a poorly-performing fund could cost the average member more than $500,000 over their lifetime.
The ATO said it would locate all accounts that have a balance of $6,000 or less that have not made any contributions or changes in investment or insurance options for 16 consecutive months. This money would then be transferred to a member’s active account within 28 days if the combined balance is greater than $6,000. If there was no active account, the money would remain with the ATO until claimed by the individual.
Protecting Your Super legislation would also affect life insurance with members at risk of losing life insurance coverage if their account was inactive.
Earlier this week, AIA Australia, Commonwealth Superannuation Corporation and Mercer launched a ‘click, check and protect’ campaign to remind individuals to review their personal insurance circumstances ahead of the legislation.