In a pre-budget submission, ASFA said the treatment of unpaid superannuation, in the case of an employer insolvency or bankruptcy, is currently subject to a complex combination of legislative provisions.
“In ASFA’s view, there is merit in reviewing the treatment of unpaid SG entitlements in insolvency/bankruptcy, with the objective of considering how to achieve the maximum possible recovery on behalf of affected employees,” the submission said.
ASFA also said in its submission that estimates show it would cost around $150 million per year to include unpaid SG in the fair entitlements guarantee administered by the government, with around 55,000 affected individuals standing to benefit from this initiative.
It called on the government to provide the ATO with the ability to pay unclaimed money to a complying superannuation plan where the commissioner is satisfied as to the identity of the lost member account owner and the individual holds an account in the proposed active destination fund.
ASFA said given that the ATO will have more information about superannuation accounts under the recent changes to super, the tax office should be empowered to initiate the repatriation of lost member accounts instead of just responding to member requests.
“Such a change would be consistent with the policy objective of reducing the number of unnecessary accounts within the superannuation system,” it said.
“While interest is paid at the CPI rate on amounts held by the ATO, a member with a balance greater than $2,000 is better off in an average fund’s default investment option.”
ASFA said there needs to be time to allow the various changes to super to be bedded down in order to reinforce public confidence in the system.
An ASFA-commissioned survey of more than 1,000 Australians found that while 54 per cent of respondents agreed that superannuation was a good way to save for retirement, 47 per cent felt that the government was making too many changes to the rules.
The survey revealed that 34 per cent of respondents felt that superannuation was taxed too much.
Only 3 per cent of respondents said superannuation was taxed too little.