Under new legislation, inactive super accounts with balances below $4000 will be transferred to the ATO. Here’s how to prevent this from happening.
Legislation has come into effect on from 31 December 2015 that mandates all inactive superannuation balances be transferred by super funds to the Australian Taxation Office. In 2016, this will affect all super balances below $4000. From 31 December 2016, this minimum balance will jump to $6000.
According to the ATO, this accounts for a total of $16.24 billion in lost superannuation spread across millions of individual accounts, as at 31 December 2015. Any lost super can be reclaimed through the ATO or AUSfund, but it is easier if members avoided this altogether by staying engaged with their superannuation and working with a professional financial adviser.
Will it affect me?
Your superannuation account is currently at risk of being transferred to the ATO if:
- It has a balance below $4000, and
- It has been inactive for 12 months or more.
What should I do?
If you have multiple inactive super accounts, you could save hundreds of dollars in fees by consolidating your super accounts or simply update the details with the existing super funds to prevent it from becoming lost.
Combining separate accounts will allow you to invest more in your retirement. But before you close any super accounts, it’s important to check with your fund about any hidden fees, charges, or insurance issues.
Australian Institute of Superannuation Trustees chief executive Tom Garcia cautions members to check the implications of super consolidation to their insurance cover, in a statement to The New Daily. As consolidating an account may mean losing valuable insurance cover that you could need in the future for you and your family.
According to the actuarial firm Rice Warner, if all super fund members with multiple accounts consolidated their super, the average account balance could rise by as much 68%. That’s an increase of more than $46,000 from figures as at June 2015.
The easiest way to locate any accounts you may have is to create a MyGov account through the ATO, which will list all of your accounts for you, the balance, if it has insurance and the contact details for the super fund.
But if it all gets too hard, give us a call at First Class Wealth to see how we can help. Contact us on (02) 7903 2405 to book in a free complimentary 15 minute phone call to discuss your situation. We look forward to helping you keep your money with you and not letting it be transferred to the ATO.