Federal Member for Wide Bay Warren Truss has warned South Burnett residents to check inactive bank, superannuation and insurance accounts, alleging a “cash grab” by the Federal Government to create a Budget surplus.
“Legislation passed Federal Parliament last week to allow the Gillard Government to sweep up $700.9 million from people’s private bank, insurance and superannuation accounts in this year alone,” Mr Truss said.
“Three-quarters of Labor’s so-called Budget ‘surplus’ will actually be taken out of people’s accounts without their knowledge.
“Over the next four years, the government plans to rake in $886 million in its grab for cash from savings and investments.”
The Federal Government has cut the time that funds are held in inactive bank, first saver, and insurance accounts from seven years to three years. After this time, the money will be automatically transferred to the Australian Securities and Investments Commission.
Superannuation accounts that have been inactive for five years, with balances of less than $2000, will be transferred to the Australian Taxation Office. Previously the cut-off limit was $200.
Mr Truss said account owners could reclaim the money back but he believed the Federal Government was banking on much of the money never being claimed.
“Under Labor’s changes, if their money has been sitting idle in their account for more than three years, the government will swipe it,” Mr Truss said.
“I strongly encourage anyone who may have an account that has not been used in the last three years, or a superannuation account with a balance of less than $2000 to make contact with your financial institution and make arrangements to hold on to your money before the government grabs it.”
To locate funds from an inactive bank account, visit:
Federal member for Oxley Bernie Ripoll, the Parliamentary Secretary to the Treasurer, told Parliament the amendments were “good and sensible changes” that would help reunite consumers with their lost bank accounts and superannuation accounts.
“This also maintains the value of those accounts into the future. The new arrangements will also help reduce the number of superannuation accounts that have unidentifiable members by reducing the period of time for which a superannuation fund can hold the account of an unidentifiable member.
“This will encourage funds to collect sufficient information to identify members during the period when contributions are being made.”
Currently, authorised deposit-taking institutions are required to transfer accounts to the Australian Securities and Investments Commission where there has not been a deposit or a withdrawal, other than bank fees, for seven years.
There is a similar requirement for life insurers except that the seven-year period is from when an amount becomes payable, such as when a policy matures.
To help reunite people with their unclaimed money, details of all unclaimed bank accounts and life insurance amounts are published on the ASIC website.
Mr Ripoll said people could reclaim these bank accounts and life insurance amounts at any time. However, currently no form of interest is paid when they are reclaimed. Under the amendments the inactive period will be shortened to three years and interest will be paid at a rate equivalent to consumer price index inflation from July 1, 2013.
“This will ensure that bank accounts and life insurance amounts reclaimed from ASIC maintain their real value – a very important amendment and a very good one for consumers,” Mr Ripoll said.
He said the amendments would also help to preserve superannuation balances – and allow interest to accumulate.
“The Treasury estimates that, under the current rules, a 20-year-old with $1000 in superannuation can unknowingly have their super savings eroded to just $418 after five years by a range of fees and deductions,” he said.
“Fees and insurance charges typically exceed average investment earnings, even for accounts with $2000.
“For example, a 30-year-old with $2000 can unknowingly have their super savings eroded to just $1250 over the same five-year period.
“However, as a result of the new arrangements a 20-year-old with $1000 currently inactive in super is expected to be able to claim $1131 from the ATO after five years—a boost to their superannuation savings of around $700 compared with the current arrangements.
“This is a massive win for consumers and a proper way to deal with people’s retirement savings. A 30-year-old with $2000 is expected to be able to claim $2263 from the ATO after five years — a boost to their superannuation savings of around $1000 compared with the current arrangements.”
[This report, with clarifications, replaces an earlier version published today]