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Nick Xenophon wants ATO to give back unclaimed super to members

If you leave your super behind the ATO will pick it up.

If you leave your super behind the ATO will pick it up. Photo: Getty

While Australians struggle to build retirement balances, there’s $2.7 billion in lost super sitting in the coffers of the Australian Tax Office, and South Australian Senator Nick Xenophon wants it distributed automatically to its rightful owners.

But the tax man has been going the opposite way in recent times. A rule change from January 1 saw $220 million in extra funds, classed as “unclaimed”, swept up by the ATO when it increased the threshold for such action from $4000 to $6000.

“The ATO has to be forced to reunite workers and their super. This problem needs to be fixed,” Senator Xenophon told News Corp.

Lawyer with Maurice Blackburn, Kim Shaw, told The New Daily that her firm regularly finds information on unclaimed super when people who have been injured or become ill seek to claim on the disability insurance offered by their super funds.

“We send requests to the ATO with names and tax file numbers and they can locate them without a problem. If there was a greater enforcement requirement for the ATO and the super fund to find the member, it would work. I’d support legislation in the area,” she said.

The super industry is behind Senator Xenophon’s idea and agrees it could be easily done.

“There would be no Australian rejecting the return of their hard-earned funds, particularly when consolidation into an active account could mean thousands extra in retirement,” said Martin Fahy, CEO of the Association of Super Funds of Australia.

“Recent changes to superannuation reporting requirements have enhanced the level of information held by the ATO about super accounts.”

The lost monies could then be simply paid into members’ existing accounts, Dr Fahy said.

Industry Super Australia public affairs director Matt Linden said he was “conceptually supportive” of the Xenophon plan. 

“Most Australian workers would have an expectation that the ATO would take active steps to reunite them with lost super, rather than passively sit on the money.”

So what is ‘unclaimed’ super?

The ATO defines it as super balances below $6000 where the member has not touched them for five years or more and the fund is sure it cannot contact the owner.

The fund is required to sweep this money over to the ATO where it is paid a small interest rate that matches the rate of inflation. That means it is earning only 1.5 per cent currently while the average growth super fund returned 7.7 per cent in 2016.

Much of the money, in the over 4.3 million accounts, appears to belong to younger people who move in and out of part time or casual jobs and become uncontactable when they change addresses or phone numbers.

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