Thousands of Australians are being left billions of dollars out-of-pocket and without vital insurance coverage after losing track of their superannuation accounts.
Recent changes means the Australian Taxation Office can now collect lost or unclaimed super accounts with balances of up to $2000. The threshold has been increased from $200.
Slater and Gordon superannuation lawyer Annemarie Gambera warns plans to increase the threshold to $4000 next year and $6000 in 2016 will further hurt ordinary Australians and should be put on hold.
“The ATO has collected more than a billion dollars in lost superannuation in the past year after the threshold increased from $200 to $2000,” Ms Gambera said.
“Further threshold increases will result in even more superannuation dollars being transferred to the ATO.”
An analysis by the Financial Services Council of the changes shows almost 214,000 accounts would be transferred to the ATO above the $2,000 threshold with total insurance benefits of almost $12 billion by sum insured.
“Not only are Australians losing money that belongs to them, but also insurance coverage that is there to protect them in the event they can no longer carry out normal work duties,” Ms Gambera said.
Australians have insurance through their superannuation accounts. This can be accessed when certain unforeseen circumstance prevents the fund holder from continuing in their current job. Some superannuation accounts also offer income protection insurance.
“Most people who come to us have no idea they are paying for insurance in their super and may be able to make a claim if circumstances arise that prevent them from continuing to work in their current role,” Ms Gambera said.
The ATO has revealed it holds unclaimed superannuation worth $18.2 billion dollars.
Ms Gambera said more should be done to make Australians aware of the consequences of losing track of their superannuation and to inform them about how to claim back what is their money.
Superannuation accounts are deemed to be lost when the super fund cannot contact the owner, usually because they have changed jobs, names or address or even the account has been inactive for 12 months.
Ms Gambera urged Australians to take charge of their superannuation by seeking financial advice to review their multiple funds, checking the fees they pay and the level of insurance coverage they have.
“Losing track of your super may mean paying unnecessary fees and may reduce the amount of compound interest earned.”
Australians whose superannuation has been transferred to the ATO can reclaim their superannuation. The first step is to find any lost super through the SuperSeeker website.