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ASFA concern for lost members
The Association of Superannuation Funds of Australia (ASFA) has expressed concern that proposed changes to lost member arrangements may disadvantage members, stripping them of insurance coverage.
In a submission to the Treasury on the proposed legislation covering lost members’ superannuation accounts, ASFA said it was concerned that where a lost member who had been inactive for five years was transferred to the jurisdiction of the Australian Taxation Office (ATO), there might be a subsequent loss of insurance cover.
“It may not be a big issue with accounts under $200,” the ASFA submission said. “But it may well be (a big issue) for those [who] are paid to the ATO based on the five-year no transaction rule, as the account balances could be substantially more than $200 and are likely at times to have insurance.”
The submission said that ASFA members had expressed concern that the new regime might lead to complaints that trustees had not done enough to find a member.
The ASFA submission called for the Treasury to not only issue further guidance on the issue, but also indemnify trustees with respect to the potential loss of insurance.
AUTHOR
Mike Taylor
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