As a member of BAN TACS Accountants, IN8 Business Advisory has exclusive access to Noel Whittaker’s tips on building your wealth and minimising your risk. This latest article discusses the merits of salary sacrificing to maximise your superannuation contributions. Consult your financial advisor for further guidance.
Do you have less than $6,000 in a super fund? Perhaps you have bits and pieces of super from previous employers. Here’s an article from Noel Whittaker about the Government’s latest legislation, which sweeps all “inactive” super accounts into “unclaimed monies”.
Column by Noel Whittaker, January 16, 2017
Hidden away in all the superannuation changes is a measure that could have huge consequences for the un-informed. Under the new legislation that came in on January 1 all “inactive” superannuation accounts with a balance of less than $6000 will be required to be transferred to “unclaimed monies”.
An inactive account is one where a member joined the fund through their employer more than two years ago, and which hasn’t had a contribution or rollover into the fund in the last five years.
Now here’s the rub. The rules require all employer funds to offer life and TPD insurance on an opt-out basis. It’s not compulsory, but you will be automatically insured unless you specifically refuse it. Debits to your fund for insurance premiums do not count as activity.
The bottom line is that you could lose both your superannuation and your life insurance in one hit, because in most cases insurance cover ceases once your account is transferred to “unclaimed monies”.
The good news is that your money need not be lost forever. Interest is paid by the government on unclaimed accounts at the rate of the CPI, currently 1.3%, and it is possible to get your superannuation back.
I recommend you first go to myGov and open an account. This will allow you to go to the ATO website and view all your superannuation accounts, including “lost” and “unclaimed” super, and then consolidate them by transferring your unclaimed super to an existing fund. If you are a senior you may be able to make a direct claim for payment.
There is a window of opportunity. The superannuation funds are not required to transfer inactive funds to unclaimed monies until April 2017, so you do have a few months to do some research and track down your missing dollars. It is also the perfect time to examine your insurance needs to decide if what you have is appropriate. Apparently, almost 50% of super fund members don’t even know they are insured.
It may take a couple of hours to find your missing superannuation but it could be well worth the effort. Suppose you are 30 now, found $15,000 in unclaimed super, and rolled it back to your current fund. That simple decision may increase your final superannuation balance by $300,000 at age 65. That’s a great return for a small amount of time spent.
Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions.
Email: noel@noelwhittaker.com.au
