New lost super limits risks losing insurance
The Federal Government's proposal in the 2013/14 Budget to increase the balance threshold for transferral of unclaimed super money could deprive super members of insurance benefits without their permission, according to the Association of Superannuation Funds of Australia (ASFA).
Interim chief executive, Jim Minto, has called for the Government to reconsider the thresholds at which members' superannuation is transferred to the Australian Taxation Office (ATO).
The proposal was to lift the current threshold of $2,000 to $4,000 from 31 December, 2015, and then to a threshold of $6,000 from 31 December, 2016.
"The intent of this policy is to protect the balances of small accounts from erosion by fees and insurance premiums," the Treasury said.
The ATO said the measure was intended to preserve the value of lost member accounts and ensure the accounts were returned to the owners.
However, Minto said this should be re-considered, bearing in mind that around 50 per cent of inactive accounts in both the $2,000 to $4,000 and $4,000 to $6,000 ranges had 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," Minto said.
"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."
ASFA reiterated its calls for members to reclaim lost super, with Minto stating that nearly $12 billion was sitting in lost super accounts.
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