Australians with multiple superannuation accounts in the same fund stand to benefit from legislation introduced into the Parliament today to the management of superannuation accounts.
The Minister for Financial Services and Superannuation Bill Shorten said the Gillard Government is committed to reuniting people with their lost superannuation.
The changes included in the Tax and Superannuation Laws Amendment (2013 Measures No. 2) Bill 2013 expand the duties of superannuation fund trustees to implement procedures to consolidate accounts where they hold multiple accounts for the same member and consolidation is in the member's best interest.
At June 2012 there were almost 32 million superannuation accounts in Australia which is almost three accounts for every worker.
Australians' retirement savings can be eroded by multiple administration fees and insurance premiums that are charged for unnecessary accounts. Unnecessary accounts also add to fund administration costs.
The Gillard Government is committed to facilitating a reduction in the number of unnecessary accounts. This will boost superannuation balances by ensuring members avoid paying unnecessary fees and reduce the number of lost accounts.
Consolidating multiple accounts
Currently, there is no requirement for superfunds to actively help members to consolidate multiple accounts within the same fund. This can lead to members paying unnecessary fees or losing track of their savings.
The Gillard Government has introduced legislation that will require superannuation funds to consolidate accounts where a member has multiple accounts within a fund and consolidation is in the member's best interest.
This new obligation will require trustees to establish procedures for consolidating multiple superannuation accounts they hold for the same member on annual basis. Defined benefit interest accounts, accounts supporting an income stream and First Home Saver Accounts will all be exempt.
The measure will commence on 1 July 2013 with the first round of consolidation to occur by 30 June 2014. This will apply regardless of the balances of the accounts concerned.
'Consolidating multiple accounts will ensure Australian's retirement savings are not eroded by unnecessary fees and charges. This change has been developed in consultation with industry and demonstrates the Government's commitment to increasing the future retirement savings of Australians,' Mr Shorten said.
This Bill implements the Cooper Review recommendation to permit fund trustees to auto-consolidate multiple accumulation accounts.
Following consultation with industry the need to proceed with inter-fund consolidation—consolidation between funds of low balance, lost and inactive accounts into a member's active account— will be reviewed in late 2014.