ATO’s super duper rip-off
THE federal government has pocketed an extra $220 million of our superannuation to add to the billions it has already trousered even though it could simply return the money to its rightful owners.
Super funds have urged Treasurer Scott Morrison to change the law to force the Australian Taxation Office to use data it has on record to pay unclaimed money into active accounts, rather than profiting from it until holders ask for their cash back.
The push comes as new figures show the owners of lost super are each missing out on thousands of dollars in investment earnings while the government has their accounts.
Treasury scored $220 million on January 1 when, for the first time, lost super accounts with less than $6000 had to be transferred to the ATO.
The ATO was already holding more than four million small unclaimed accounts containing a combined $2.5 billion after a series of increases in the threshold from $200 in 2012 to $4000 by the start of 2016. “One way to greatly improve the system is to have the ATO, which has the necessary capacity and identifying information, to return unclaimed funds currently captured by legislated threshold transfers,” said the Association of Superannuation Funds of Australia CEO Martin Fahy.
ASFA has put the proposal to Mr Morrison.
Other groups also say too little is being done to reunite super with owners. “More needs to be done by the government and ATO to inform people they have lost super,” said Tax and Super Australia’s Andy Nguyen.
Unclaimed super transferred to the ATO is protected from fee erosion but does not generate investment earnings. It only grows by the rate of inflation. This is likely to cost the owner thousands of dollars.
Analysis for he Sunday Territorian by REST Super suggests a $6000 account in government hands would be worth $7600 after a decade compared to $11,100 if it was accruing investment returns in an active fund — a difference of about $3500. The government-held account would have grown by 27 per cent, versus 85 per cent had it been in an active fund.
Revenue and Financial Services Minister Kelly O’Dwyer said the government would consider the ASFA proposal.
Kirsty Shiel (pictured) began consolidating her super after moving back to Australia. When she contacted the fund connected to her first job, she was told her savings had been sent to the ATO. Ms Shiel, 33, supported moves to get unclaimed super transferred to active accounts instead of to the ATO: “After all, it’s your money.”