ASFA warns unclaimed monies measure could produce 'merry-go-round of money'

11 December 2012
| By Staff |
image
image
expand image

The Association of Superannuation Funds of Australia (ASFA) has warned that raising the unclaimed small account balance threshold from $200 to $2000 may result in a "merry-go-round" of money that has no benefit for anyone.

ASFA said the process could result in unnecessary costs for funds and the Australian Taxation Office (ATO).

The association said definitions for "uncontactable" and "lost" needed to be revisited, as the SIS regulations had been drawn up 20 years ago. Treating members as "uncontactable" because mail had been returned despite continued contributions to the fund was outdated, it said.

ASFA estimated over 1.5 million accounts could be adversely affected by the move unless a provision were included to exclude members that had contacted the fund within the last two years.

Super fund members could also lose insurance benefits under the new measures, ASFA said.

Insurance could be funded for years with a $2000 account balance and members could be left seriously under-insured if they lost insurance as a result of their super account being transferred to the Australian Taxation Office (ATO), according to ASFA.

In 2010-11, the super industry saw 60,000 exits due to potentially insurable events, which would indicate that under the new measures there could be in excess of 2000 account holders a year losing their insurance cover.

ASFA said ideally account balances with insurance should not be transferred to the ATO, given the unresolved issues with auto-consolidation and insurance.

The Government should take responsibility for informing members of the loss of insurance and associated consequences, ASFA said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

10 months 2 weeks ago
Kevin Gorman

Super director remuneration ...

10 months 3 weeks ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

10 months 3 weeks ago

The central bank has served up a disappointment for punters on Melbourne Cup Day....

12 hours ago

The fund’s inaugural chief retirement officer is looking to establish a new venture. ...

16 hours ago

The sovereign wealth fund remains cautious of the impact of high inflation as it announces a strong return in its latest update....

1 day 10 hours ago