Government 'lost super' move requires scrutiny
Self-managed superannuation fund (SMSF) trustees who maintain modest balances in conventional superannuation funds to access insurance benefits will need to remain vigilant to ensure they are not subject to auto-consolidation or deemed a "lost" member.
That seems to be the bottom line of a submission filed by the Association of Superannuation Funds of Australia (ASFA) to a Senate Committee dealing with the Government's legislation intended to have "lost" super amounts of less than $2,000 transferred to the Australian Taxation Office (ATO).
The ASFA submission points to a number of unintended consequences which might flow from the Government's Treasury Legislation Amendment (Unclaimed Money and Other Measures) Bill 2012, not the least of which is how a member is actually defined as being "lost".
The ASFA submission claims the proposed legislation has a range of consequences which dictates that it should not be viewed in isolation from other Government policy initiatives flowing from its Stronger Super proposals.
"This bill proposes to make changes to the first two of the above categories and to the rules around payment of interest. Specifically:
- the “unclaimed small account balance” test amount of $200 is to be increased to $2,000;
- the period of inactivity with respect to the accounts of “unidentifiable members” is to be reduced from 5 years to 12 months; and
- from 1 July 2013, interest will accrue on amounts held by the Commonwealth and will be payable when the amount held is claimed.
The superannuation body said it was important that the Government's moves not be viewed in isolation and that it should be viewed in the following contexts
- the consequences for members when their account is transferred to the ATO;
- what will happen to the superannuation accounts transferred to the ATO?;
- current proposals for the auto-consolidation of accounts; and
- the significant changes being made to the superannuation industry under the Stronger Super reforms.
AUTHOR
Staff Writer
Recommended for you
Underestimating the cost of insurance by almost $75,000 in a Statement of Advice is among multiple reasons that a relevant provider has faced action from the FSCP.
Financial Services Council chief executive, Blake Briggs, is urging Minister for Financial Services, Stephen Jones, to take advantage of the QAR opportunity to reduce regulatory duplication and ensure advice is affordable.
Former chair of the House of Representatives’ Standing Economics Committee, Tim Wilson, is planning a return to politics after losing his seat in the 2022 federal election.
Morningstar is going to offer research ratings of funds in the $3.5 trillion superannuation sector for the first time in response to demand from financial advisers.
