As unbelievable as it sounds, millions of Australians have abandoned billions of dollars in superannuation funds. As of October 2010, there was $13 billion dollars in unclaimed superannuation. This precious money sits in abandoned superannuation fund accounts for years, slowly eaten away by management fees. However, the Federal Government made amendments in the law in 2009 that enabled them to take this money as consolidated revenue. The Australian reported that in the five years after 2010, the Federal Government will take $10 billion of this money. $300 million has already been taken from accounts of people who worked in the country but havenít returned to Australia or collected the funds in the past five years.
Minister for Superannuation and Corporate Law Nick Sherry announced in May 2009 that superannuation funds will be required by law to transfer the money of inactive accounts where the balance is less than $200. Accounts whose records cannot properly identify its owner will also see their balances handed over to the government. Other scenarios in which your funds may become government revenue is if you over the age of 65, the super fund hasnít received any money for two years, and the member hasnít been able to be contacted for five years. If a member of a superannuation fund dies, the account has been dormant for two years, and the person entitled to receive the deceasedís benefit cannot be contacted, the money will go to the government under this new scheme.
Additionally, new laws allow spouses to be entitled to superannuation balances when there is a divorce. If the superannuation fund is unable to ensure the money will be received by the ex-spouse and the fund has made considerable effort for a period of time, the fund will then give the money to the government.
To some this may seem unfair, but the fact remains that the social security of retired Australians continues to be tenuous. Sherry stated that, "The revenue savings from these measures are designed to ensure that the retirement incomes system is equitable and sustainable over the long term."This is as important as ever given the volatile market after the global recession of 2008, which saw governments around the world experience a sharp downturn in their revenue. It has been estimated that given the projected figures, the Australian Federal Government will see an increase of $238 million in revenue as a result of this initiative.
If you are one of the millions of Australians with lost super who may be affected by this change in the law, thereís no need to worry. Any unclaimed super thatís been rolled over to the government can be reclaimed at the Australian Taxation Office. There are no cut-off dates for doing this.
Superannuation experts largely agree that there will be a gap for most Australians between the amount they should save up for retirement and the money they will have in their super fund by the time they retire. Itís therefore wise to keep up with the latest legislation passed with regards to super funds and to make sure that your unclaimed super accounts are not being collected as government revenue.