Super that is deemed as lost is transferred to the Australian Tax Office. The ATO keeps the Superseeker database with a lost members register which you can check if your super has been transferred to the ATO.
Why do the lost super rules exist
The rules were created to help:
- Individuals so that superfund managers wouldn’t take fees from low balance accounts until the balance was nil (Under government research a $1,000 account after 5 years of fees and charges could be reduced to about $418).
- Fund managers reduce their administration costs (I can only imagine how many letters were previously sent to people with $200 or less in their super account)
- Australian government by allowing them to use taxpayers money as a loan to fund government spending and add to the surplus.
Old lost super rules – under $200 or 5 years inactivity
When the rules came in initially, super was only ‘lost’ after 5 years and if the owner couldn’t be located or if the account had $200 or less.
New lost super rules – under $2,000 with 1 year inactivity
From 31 December 2012 when the rules change, a super account becomes ‘lost’ if it is inactive over 12 months and the threshold has increased to $2,000. This means that a lot more super is going to be considered ‘lost’ and transferred to the Government.
Lost super amounts will keep up with inflation after 30 June 2013
After 30 June 2013, the lost super will start to earn interest. However this interest is only at the rate of the inflation – which is usually around 3% per year.
What to do with your multiple super accounts
- If you have a few super accounts – Consolidate
If you have a few super accounts it might be worth consolidating the super accounts into one account (particularly if the amounts might become lost). I have written about this process under www.nomoney.com.au/combinesuper.
- Check if you have lost super and consider action
If you think you might have lost super, it is worth checking the ATO website.
http://www.ato.gov.au/individuals/content.aspx?doc=/content/00250233.htm&page=22&H22 (if the link doesn’t work try Googling “superseeker ato” or “lost super ato”)
Note that superseeker.com.au is NOT the correct ATO website.
Also – you can call the ATO on 13 28 65 (then enter fast key code 1 then 2). The ATO will ask your TFN and date of birth.
Keep your details current
If you move address – make sure you give your super fund your new contact details.
What if I keep your super lost?
You might consider keeping your super lost.
The ATO say that while you may not want to transfer your lost super to another account, you should at least advise your original fund that reported you as a lost member with your new contact details. That way you can keep track of your super from the superfund. They can also remove you from the lost member register when they next report to the ATO.
My super fund hasn’t had negative earnings for a while – maybe I should let the ATO manage my super!
Once lost super starts accruing by inflation (after 30 June 2013), it is possible that the lost super might outperform a regular super fund in the short term (given the lost super doesn’t charge fees).
But in the long term (say 10 years or more) it is more likely that money in a regular super fund will perform better. Even if your super fund was only invested in the bank and paid management fees, it should perform better than inflation.