Govt urged to upgrade status of unpaid SG entitlements
Unpaid superannuation guarantee (SG) instalments should be treated in the same way as other unpaid employment entitlements when companies become insolvent or bankrupt, according to the Association of Superannuation Funds of Australia (ASFA).
ASFA has used its pre-Budget submission filed with the Treasury late last month to argue that unpaid SG instalments should be covered under the Commonwealth's Fair Entitlements Guarantee (FEG) — the successor regime to the General Employee Entitlements and Redundancy Scheme (GEERS).
The submission has pointed out that, as the regime currently exists, unpaid superannuation falls outside the FEG regime and is "subject to a complex combination of legislative provisions, including the Superannuation Guarantee (Administration) Act 1992, the Corporations Act 2001, the Bankruptcy Act 1966, and the ‘director penalty notice' provisions of the Taxation Administration Act 1953".
The submission said ASFA believes there is merit in reviewing the treatment of unpaid SG entitlements in insolvency or bankruptcy, with the objective of considering how to achieve the maximum possible recovery on behalf of affected employees.
"Superannuation payments owed by insolvent employers can have a major impact on adequacy," it said. "ASFA estimates that it would cost around $150 million per year to include unpaid SG in the FEG, with around 55,000 individuals affected."
Elsewhere in its submission, ASFA has also urged that the Australian Taxation Office (ATO) be empowered to proactively undertake the repatriation of lost superannuation accounts when members can be clearly identified.
It said that while the ATO was active in identifying and contacting account owners and encouraging them to consolidate lost accounts with their other superannuation holdings, "it would appear from discussions with the ATO that only a small percentage of these account holders follow through with the necessary action to enable the Commissioner to consolidate these amounts".
"Given recent changes to superannuation reporting requirements that have enhanced the Commissioner's information about superannuation accounts, ASFA considers that the opportunity should be taken to amend section 24G of the Superannuation (Unclaimed Money and Lost Members) Act 1999 to empower the Commissioner to initiate the repatriation of lost member accounts. Such a change would be consistent with the policy objective of reducing the number of unnecessary accounts within the superannuation system."
Recommended for you
Data and technology provider Novigi has acquired Iress’ superannuation consulting and managed services business from Apex Group.
AMP is to launch a digital advice service to provide retirement advice to members of its AMP Super Fund, in partnership with Bravura Solutions.
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
