Inactive bank & Super Accounts to be seized

Households face losses of nearly $800 million of their aggregate savings, as new laws enables the cash-strapped Federal Government to seize cash from inactive bank and superannuation accounts.

From May 31, the federal government will be able to transfer all money into their own revenue from bank accounts that have not been used for three years.

Bank accounts of $1 upwards that have not had any deposits or withdrawals over the preceding three years will be transferred to the Australian Securities and Investment Commission.

The law permitting this money grab is forecast to raise $109 million during 2012-13 year as inactive accounts are dipped into by the federal Treasury.

However, the surprise move may have a negative impact upon depositors who may have put money away in a special accounts for their offspring’s education or have opted to lodge an inheritance into separate accounts for that “rainy day”.

And unless superannuation fund members do not act now, hundreds of thousands of superannuation accounts with balances up to $2000 will also be acquired by the Australian Taxation Office (ATO).

Super fund providers only have until May 31 to transfer these accounts across to the ATO.

Latest figures reveal that there are 3.4 million "lost" super accounts worth $16.8 billion.

“Lost” super, of course, belongs to people, whose accounts are inactive, transferred from another super provider as a lost member, or is “uncontactable” – meaning two letters to their last-known address have been returned unclaimed.

People could be classified as “lost” even if your previous employer give a super fund an incorrect address.

And members will lose insurance arrangements once their fund transfers their account balance to the ATO.

Legislation passed late in 2012, allows the government to claim $760 million of privately owned superannuation and bank accounts that have been deemed “lost”, as revenue.

Fund members need to act now to retrieve their lost funds before their money is transferred to the ATO.

The ATO is supposed to find you and ''reunite'' you with your lost superannuation.

But the government is banking on a very large number of depositors never being found.

As most default-based industry super funds lack personal advisers to help members keep abreast of things, it is common for Australians to accumulate multiple super accounts as they change jobs.

And many fail to consolidate their super accounts.

An ATO spokesman said about 1.1 million accounts, with balances of between $200 and $2000, exist on the lost members register.

Last year, the Association of Superannuation Funds of Australia told a Senate committee that the laws would result in a ''substantial" number of active accounts being transferred to the ATO.

The Australian Institute of Superannuation Trustees said the problem was most likely to affect new employees, young people, and low-income earners.

''Unfortunately, the legislation will... result in un-contactable members with account balances of less than $2,000 who are still employed and receiving contributions being transferred to the ATO,'' the inquiry was told.

The average balance of lost member superannuation accounts is $4940.

Even when someone realises their funds have been swallowed up, getting that super money back from the ATO, and bank savings from ASIC, can be a time consuming exercise.

Moreover, if you ever see your super funds again, you will only be entitled to interest on the money the ATO holds on your behalf from July 1.

Interest is only paid in line with the Consumer Price Index, so you'll be further disadvantaged if your superannuation fund's returns are above CPI.

Many people want to consolidate their various funds, but due to strict new guidelines now in place, they are not sure on how to do this and consequently procrastinate.

The only way now to truly secure your super, is to get in control your own super funds.
 

TIPS TO STOP LOSING YOUR SUPER & INSURANCE COVER

1. Contact our office at Roxburgh Securities, & we can assist you in consolidating your funds

2. Ensure you nominate that fund on a Super Choice form with your employer - we have these forms

3. Ensure Roxburgh Securities has your latest mailing address & email address & contact phone numbers so we can update your details, to prevent your fund becoming "lost".

4. When cost effective, then consider upgrading to family Self Managed Fund, which cannot be automatically transferred to the Australian Tax Office.

Contact us on 08 9379 3555 or email steve@blizard.com.au

Steve Blizard is an authorized representative of Roxburgh Securities.
 

New Zealanders and Australians will be able to transport their super with them when moving between the two countries

By Steve Blizard

THE number of job-ready New Zealanders heading for Australia accelerated this year, with many of them bound for Western Australia.

According to Department of Immigration figures, 60,293 New Zealand citizens moved to Australia during the 2011–12 financial year.

In turn, approximately 14,000 Australians departed for New Zealand.

The statistics show that 44,304 New Zealanders will settle permanently while 15,989 were long-term arrivals, representing a 22.5 percent increase on the previous year.

That is about equal to the population of New Zealand's 10th largest city, Rotorua.

And for nearly one-fifth of these the destination was WA.

It’s little wonder, when the average full-time weekly wage in 2011 for a Kiwi stood at $NZ1017 ($800), compared to the average equivalent Australian wage of $1330.

Statistics also showed that at 30 June this year there were just over 647,000 New Zealanders living in Australia.

That’s well in excess of the total population of Tasmania which presently stands at about 510,000.

Since 1994, Kiwis have been able to live and work in Australia through a Special Category Visa arrangement.

This means they’ve had virtually unfettered access to the Australian labour market.

However, over the past two decades, Kiwis wishing to return home have been caught by the 9 percent SGC super system, which means they have their savings locked away in Australia until they reach retirement age.

The good news for Kiwis is that this financial drawback has finally been resolved.

Under new laws just passed by the Australian Senate, New Zealanders and Australians will now be able to transport their super with them when moving between the two countries.

This means New Zealanders with super funds in Australia will be able to repatriate their savings and roll them into KiwiSaver or another complying scheme, from July 2013.

The same privilege will be afforded to Australians living in New Zealand under the terms of a Trans-Tasman portability agreement.

The scheme comes into effect as part of the Superannuation Legislation Amendment (New Zealand Arrangement) Bill 2012.

This is the first time Australia has set up a fully portable international superannuation scheme.

NZ Finance Minister, Bill English, says Australia's tax office estimates it holds about $A13 billion ($NZ16.6 billion) in "lost funds" in the Australian superannuation system.

"We expect that much of this money could belong to New Zealanders who have returned home and these new rules will allow these funds to be brought back to New Zealand," Mr English said.

Also, in June this year, the Australian Securities and Investment Commission (ASIC) and New Zealand's Financial Markets Authorities (FMA) agreed to allow qualified financial advisers to practise on both sides of the Tasman.

Operating under trans-Tasman Mutual Recognition legislation, advisers will be kept busy recommending optimal outcomes for clients that may benefit from the new arrangements.

KiwiSaver members moving from New Zealand to Australia will be able to keep any member tax credits if they transfer to an Australian scheme.

They will not be able to withdraw money transferred from Australia to help them buy their first home, but will be able to use interest earned on those savings to purchase property.

Over time, pressure may mount on the Australian government to allow super fund members here to access personal retirement savings to help secure their first home, now available to Kiwis under their system.

Under KiwiSaver rules, savings can be withdrawn when members reach 65, while super funds transferred from Australia may be accessed when members reach 60, as set out under Australian rules.

KiwiSaver funds transferred to Australian schemes will only be able to be withdrawn when members reach 65, as set out in KiwiSaver rules.

Self-managed super funds have been excluded; however a future coalition government will consider an expansion of the agreement to include them.

This latest superannuation measure is one more step towards a single financial market for both countries.

Steve Blizard is an authorized representative of Roxburgh Securities.

WA Business News   13 December 2012

Paying for privilege of losing cash not so super for workers

By Peter Costello  Former federal treasurer
7 Nov, 2012   Sydney Morning Herald


One of the accounting tricks the government announced in the midyear review was to take over inactive superannuation accounts and treat them as government revenue.

If you have an account with less than $2000 and your fund cannot contact you - perhaps you have changed jobs and address - the Tax Office can take the money.

The Tax Office is supposed to find you and ''reunite'' you with your lost superannuation. But the government is banking on a very large number not being found.

Under this proposal, the government will raise $555 million before June 30 next year. If the average in those accounts is $500, that would mean 1 million ''lost'' accounts. Some people will have multiple accounts. Could it be that hundreds of thousands of Australians don't care enough to ''reunite'' with their super?

More than likely a lot of these will be young people with part-time jobs where superannuation is compulsorily deducted from their wages. As they move through several different jobs, their contributions are paid to several different industry funds. They move house. If they ever get ''reunited'' with their super, they can't take the money because it can't be drawn down until they are 55. So they don't bother chasing it and fees start to run down the balance. Now the government can take the remainder in an attempt to balance its budget.

This week, I saw the annual statement of one 18-year-old who had $60 taken out of wages for superannuation contributions. That paid for $26 of life insurance premiums, $17 in government tax and $17 for ''administration fees''. After earnings, the preserved retirement benefit for this employee is $1.52. In other words, the whole transaction was run for the benefit of the government and the fund. Thankfully the superannuation contribution was only 9 per cent of wages. Soon it will go higher. These are compulsorily taken from the wages of low paid and part-time workers. It is never going to fund their retirement.

The reason there is no great outcry about this system is that so many well-paid people profit from it. The people who do the best are the funds' managers. They are allocated money by the super funds to invest in stocks and bonds. The more money they manage, the more they get paid. They also get bonuses if they ''outperform'' the industry average.

The average return of industry super funds last year was 0.61 per cent, considerably less than you would have got by putting your money in the bank. Over the past five years, the average return was -0.17 per cent, less than you would have got by putting your money under the mattress. On average, people who had money in these funds went backwards and paid fees for the privilege of losing their own money.

Next come the people employed in the industry. They get well paid for administering the schemes and allocating money to funds' managers. They report to trustees who are largely appointed through connections to employers or trade unions, which gives the whole enterprise a bit of bipartisan political cover.

The newsletter of the largest industry fund, Australian Super, which was recently posted out to all members, tells us what a great job the Superannuation Minister, Bill Shorten, is doing by getting the amount of money deducted from wages for super to increase from 9 per cent to 12 per cent. And it has a flattering profile of union leader Paul Howes, who is described as a ''public figure, prolific writer and keen tweeter''. In her recent book, former Bennelong MP Maxine McKew described him as ''the latest look-at-me, available-any time-anywhere commentator'' and Australian Super helpfully tells its readers how to follow Howes on Twitter.

This kind of publicity is gold for union officials who need to run for election and eventually want to get into Parliament. It is all paid for out of members' contributions and need never be treated as electoral funding.

The retirement standards of people do not depend on what is put into these funds. It depends on what will come out. And if returns stay at recent levels, all people are doing is putting in larger sums to chase little or no return.

Even today, industry funds are quoting retirement benefits based on 4.5 per cent real per annum returns. That is not the world of recent years. It is high time there was a thorough and open examination of returns in this industry. There has been too little critical scrutiny. We should remember that the system is not there for the benefit of those who work in it but for those who fund it out of their hard-earned wages.

Original article here


Funds warn taxman poses 'threat' to lost super

By Clancy Yeates   12 Nov, 2012   Sydney Morning Herald
Business correspondent, Canberra
 
Active superannuation accounts of less than $2,000 are at risk of being transferred to the taxman because the money could be classified as ''lost'' under a new government policy, the industry says.

In a move forecast to raise $555 million this financial year, the government last month raised the threshold at which lost superannuation accounts are automatically moved to the Tax Office.

However, industry groups say that under the current definition of ''lost'', the change could have unintended consequences for members, especially those on lower wages.

At present, super accounts are classified as lost if they have less than $200 and the member is ''uncontactable'' – meaning two letters to their last-known address have been returned unclaimed.

From January, the government plans to raise this threshold to $2,000, a move it says will save members from paying unnecessary fees. But super funds say such a change would also cause thousands of active accounts to be transferred to the taxman, because the $2,000 threshold could take in lower-paid workers and people who are new to their jobs.

The Association of Superannuation Funds of Australia told a Senate committee that as currently drafted, the laws would result in a ''substantial" number of active accounts being transferred to the ATO.

The Australian Institute of Superannuation Trustees said the problem was most likely to affect new employees, young people, and low-income earners.

''Unfortunately, the legislation will... result in uncontactable members with account balances of less than $2,000 who are still employed and receiving contributions being transferred to the ATO,'' it told the inquiry.

Aside from this ''technical'' issue and the potential for members to lose insurance benefits, the funds are broadly supportive of the changes.

Members can reclaim their lost funds from the Tax Office, which will pay interest equivalent to inflation on their unclaimed super under the change. At present, no interest is paid.

Treasury's submission said super funds had to make a ''reasonable'' effort when trying to determine if a member was "uncontactable."

For instance, it said a fund may also contact an employer in cases where contributions were still being made to member accounts, or it may engage a company such as Australia Post to try to track down the member.

The government also argues members can benefit from their money being transferred to the Tax Office because they will no longer be charged expensive management fees, and the ATO is well placed to reunite members with their money.

Original article here

TIPS TO STOP LOSING YOUR SUPER & INSURANCE COVER

1.  Contact our office at Roxburgh Securities, & we can assist you in consolidating your funds

2.  Ensure you nominate that fund on a Super Choice form with your employer - we have these forms

3.  Ensure Roxburgh Securities has your latest mailing address & email address & contact phone numbers so we can update your details, to prevent your fund becoming "lost".

4.  When cost effective, consider establishing a family Self Managed Fund, which cannot be automatically transferred to the Australian Tax Office.

Contact us on 08 9379 3555 or email steve@blizard.com.au