Voluntary transfers of super to improve outcomes, says ASFA
The Association of Superannuation Funds of Australia (ASFA) has welcomed an amendment announced by the government last week enabling superannuation funds to voluntarily transfer amounts to the ATO in circumstances where the trustee believes it is in the best interests of that member.
In its economic and fiscal update, the government announced it would amend the Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020, which facilitates the closure of eligible rollover funds (ERFs).
The amendment will defer by 12 months the start date of the measure that prevents superannuation funds from transferring new amounts to eligible rollover funds (ERFs) and defer the date by which ERFs are required to transfer accounts below $6,000 to the ATO to 30 June 2021.
It will also defer the date by which ERFs are required to transfer remaining accounts to the ATO to 31 January 2022.
The amendment will also enable superannuation funds to voluntarily transfer amounts to the ATO in circumstances where the trustee believes it is in the best interests of that member, such as amounts that would otherwise have been transferred to an ERF.
The government said the amendments were in response to requests from superannuation funds to provide additional time and flexibility for superannuation funds to transfer amounts to the ATO.
ASFA chief executive Dr Martin Fahy said there are a number of circumstances that can result in there being a small residual balance in a member’s superannuation account, including the COVID-19 early release scheme.
“Transferring such amounts to the ATO can be in the best interests of the members, especially where further contributions to that account are unlikely,” Dr Fahy said.
Dr Fahy said the flexibility to transfer balances to the ATO by trustees may be beneficial in the circumstances where the account is small and it is uneconomical for it to be maintained within a fund or a person cannot continue to be a member of the fund.
It can also be beneficial, he said, where there are remediation amounts with respect to an exited member where the benefit must be preserved within the super system, but the trustee is unable to contact the former member or a superannuation fund is being wound up and a member has not provided directions as to where their benefit is to be rolled over.
“Having the ability to transfer amount to the ATO will improve flexibility for super fund trustees in the administration of their fund, lead to more people’s super being reunited with their active account and reduce the incidence of multiple accounts,” he said.
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates. Miranda has also directed SMSF Adviser's print publication for several years.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.