Australians who have lost track of superannuation or old bank accounts will now have their money returned faster and interest paid to preserve its real value under reforms passed by the Parliament this evening.
The Gillard Government's reforms will ensure lost super and monies are properly protected so people can be reunited with money that is rightfully theirs.
There are literally hundreds of thousands of Australians who have unclaimed money in bank accounts held by Australian Securities and Investments Commission and in lost superannuation held by the Australian Taxation Office.
Under the current rules, lost super and unclaimed monies are not paid interest and are held for long periods of time by banks and super funds and eroded by fees, charges and inflation.
Under the Treasury Legislation Amendment (Unclaimed Money and Other Measures):
- for the first time, interest will be paid on unclaimed moneys held by ASIC and the ATO (at the rate of CPI inflation).
- inactive bank accounts and life insurance policies will be put on a public website after three years of inactivity (instead of seven years currently) when banks are unable to track down the owner; and
- lost superannuation accounts will be put on a public website if they contain less than $2,000 where the account has been inactive for five years or the member is uncontactable.
These lost funds can be easily found by owners or descendants by visiting the MoneySmart or SuperSeeker websites. In contrast, it is much harder to search for lost monies if they are held privately by banks and super funds.
While the Gillard Government voted to protect Australians' lost money, the Liberals voted to leave these monies with the big banks and super funds where it would remain unclaimed and continue to be eroded by fees, charges and inflation.
The Senate Economics Committee recommended the Parliament pass the legislation and found that the reforms will be of significant benefit to consumers as they help reunite people with their unclaimed money sooner and protect the real value of that money while it remains unclaimed.
These reforms will help ensure the system works for Australians, not against them. It will protect Australian's lost moneys and help reconnect them with it more easily.
This builds on Labor's other banking reforms like banning exit fees on home loans and cracking down on unfair treatment of Australians with credit cards.
To see if you have lost super, visit www.ato.gov.au/superseeker.
To see if you have an unclaimed bank account, life insurance policy or company money, visit www.moneysmart.gov.au
How the changes will benefit Australians with lost super in a super fund
Treasury estimates that under the current rules, a 20 year old with $1,000 in super can unknowingly have their super savings eroded to just $418 after five years by a range of fees and deductions, while a 30 year old with $2,000 can have their super savings eroded to just $1,250 after five years.
As a result of the Gillard Government's reforms, the same 20 year old will be able to claim $1,131 from the Australian Tax Office after five years, a boost to their superannuation savings of over $700 compared with current arrangements. And the same 30 year old will be able to claim $2,263 after five years, a boost of over $1,000 to their superannuation savings.