Inactive and Lost Super Accounts

This month we will be discussing the circumstances under which inactive and lost super accounts can be transferred to the Australian Tax Office (ATO).  

Lost or Inactive Members

As of the 31^st of May 2013, superannuation providers (QSuper, Australian Super etc.) are required to report and transfer super accounts to the ATO that belong to lost or inactive members.  A member is considered lost when a) they cannot be contacted by the superannuation provider due to a change to the members name or address and b) they have not made a contribution to their account within the last 12 months .  An inactive member is one which joined the fund more than two years ago as an standard employer sponsored member and has not made a contribution to his or her fund for the last five years.¹  Prior to the 31^st of May 2013, super providers were only required to transfer lost or inactive super accounts to the ATO where the member balance was below $200; now the amount is $2,000.  More so, the government plans to increase the $2,000 threshold to $2,500 and then again to $3,500 in December 2015 and December 2016 respectively.²

Insurance Considerations

Many people have deliberately kept small superannuation accounts because they carry insurance cover within them.  Therefore, it may be worthwhile to ensure your balance stays above $2,000 until 30 December 2015, and then continue to meet the further raised thresholds thereafter. 

Is my Super Lost Forever?

No, think of this scheme as merely replacing the role that the original super provider had.  Now, instead of QSuper or Australian Super holding your superannuation interest, the ATO will.  Consequently, you will be able to reclaim these monies at any time by using this ATO link.³ 

There are actually some benefits attached to this scheme.  Previously, super balances belonging to inactive or lost members were administered by the original super provider and continued to incur administration fees (sometimes into deficit).  Now, lost or inactive member balances must be transferred to the ATO and will not be charged fees and will be topped up each year to offset the effects of inflation.⁴  One of the disadvantages of this scheme is that the performance of the fund is capped at the rate of inflation.    

Finding my Lost Super

Although we do not provide this service, there are many companies that will locate your lost super such as AUSfund.  It is easy to accumulate super accounts when changing jobs if you tend to use your employer fund.  Consolidation of these accounts into a master fund will be important going forward but there are always issues to consider (such as associated personal insurance covers) before blindly consolidating multiple accounts.

References

^{1http://www.austlii.edu.au/au/legis/cth/consol_reg/sir1994582/s1.03a.html}

^{2 http://www.treasury.gov.au/~/media/Treasury/Consultations%20and%20Reviews/Consultations/2013/Lost%20and%20unclaimed%20superannuation%20money/Key%20Documents/PDF/Lost_unclaimed_super_money.ashx} 

^{3 http://www.ato.gov.au/Individuals/Super/Keeping-track-of-your-super/Finding-any-lost-or-ATO-held-super/}

^{4 https://www.ato.gov.au/individuals/super/in-detail/keeping-track/ato-held-super/}