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Inactive super grab inconsistent with reforms
The Federal Government's decision to lift the threshold at which inactive superannuation accounts are transferred to the Australian Tax Office (ATO) is inconsistent with superannuation reforms and unfair to those with low account balances, according to the Financial Services Council (FSC).
The Financial Services Council (FSC) was responding to an announcement by the Federal Government in its Economic Statement on Friday that the threshold of small inactive superannuation accounts, including those ‘lost' to members, would increase from $2000 to $4000 from 31 December 2015, and then to $6000 from 31 December 2016.
FSC chief executive John Brogden said the council opposed the measure and that "Governments should be consolidating peoples' superannuation, not putting it into consolidated revenue".
Brogden said the announcement was inconsistent with superannuation reforms and would target those who had only begun to accumulate superannuation.
"This Government's own SuperStream reforms have made it easier to bring accounts together. It will unfairly capture the savings of many young and low incomes in particular," Brogden said.
According to the statement the rationale for transferring these funds to the ATO is "to protect the real value of more lost superannuation accounts".
However it also appears to have a budgetary motive, with the statement also claiming that "this measure is estimated to have a net positive impact on the Budget in underlying cash balance terms of $582 million over the forward estimates".
AUTHOR
Jason Spits
Jason has been writing on financial services since 1999 and has worked for on a number of trade media titles in both a full time and freelance capacity. He joined Money Management and Super Review in 2013 in the role of Senior Journalist.
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