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Government to take lost super | Updated: 6:01:04 PM, Monday March 25, 2013
By Jen Storey Government to take lost super

The government is about to snap up money from old super accounts. You only have until May to reclaim funds in any of your untouched or uncontacted super accounts.

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Lost super always sounds a little erroneous to me. Chances are it’s not lost at all, but is sitting somewhere in an account with a superannuation provider, the owner having forgotten they have it, or where it’s kept.

There have been many initiatives by various governments to help people find the super they forgot they had. Normally, doing a search of your Tax File Number (TFN) on the SuperSeeker website at the ATO helps locate missing funds.

However, there have been some recent changes to the definitions of lost super that are about to come into effect.

What is the new definition of lost super?

Previously the Australian Tax Office (ATO) could receive lost super accounts that had balances of less than $200.

The threshold for lost super has now been increased to $2,000. That is, any superannuation account that is untouched and has up to $2,000 in it will need to be passed over to the ATO.

Superannuation fund providers have until May 31 to transfer the balances of these accounts to the ATO.

An untouched account is defined as an account that has not had a recent contribution made to the account. This may be because the account owner has changed jobs, is on extended leave or, has simply forgotten that they hold the account.

On average, every Australian has around three superannuation accounts that have been gathered as they move from job to job. Some people choose to consolidate their accounts into one. Others keep multiple accounts, often for the life and other insurances that are packaged with the accounts.

More: The ATO wants your bank details

However, even if the account is being kept for insurance purposes, if no contribution has been made in the past five years, the ATO will receive this money by the end of May.

Similarly, if your superannuation fund does not have the correct address and has been unable to reach the account owner for 12 months, the account is classified as being unidentified or uncontactable. If the account has less than $2,000 in it, it too will be sent to the ATO.

The ATO estimates that there are about 1.1 million accounts with a balance of less than $2,000.

What will happen to super funds that are not claimed?

If your superannuation funds are moved to the ATO, you will be able to claim them back. But, it will be lengthy process.

It is far easier to act now by determining if you have any lost super linked to your TFN and contacting the fund provider. In some instances, you may be able to roll the funds over into your primary superannuation account. If a rollover is not possible, then discuss with the fund provider what options are available to you.

Why is the government doing this?

This is similar to the push by the government to have the funds in inactive bank accounts moved to ASIC.

However, the official position is that Australians need to be more aware of their retirement funding needs and options. The government wants people to be more prepared for their retirement, and every dollar adds up!

There is also a statutory increase looming to the amount of superannuation that companies must pay their employees. This financial year, that is, until June 30, the superannuation guarantee rate (SGR) is 9.00 per cent. Next financial year it will rise to 9.25 per cent. The SGR will steadily rise until 2020, where it will be set at 12 per cent.

While it is in your best interests to claim your lost or forgotten super and make it a part of your retirement fund, here are two further motivating facts.

Right now, those funds are sitting in an account with your super provider. The fees charged may erode any money that is in the fund. But, before it does that, the interest earned on your money is helping the fund and not you.

Similarly, if the money gets moved to the ATO, that money is no longer working for you and your retirement. It is likely that interest earned on the money will be only equal inflation. So, even if you do claim it later, you will have lost potential interest at a higher rate.

What to do next?

Check the SuperSeeker site to see if you have any lost super. If you do, make immediate steps to claim your funds.

Speak with your accountant or financial adviser to ensure that you have a plan to save for your retirement.

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