As part of its revenue-raising to balance the budget, the government will pick up many more lost bank accounts and super accounts. After May 31, bank accounts not accessed for three years will be transferred to the Australian Securities and Investments Commission (ASIC). Last year, the government lowered the threshold of what constituted an inactive account from seven years to three years. Account-holders can recover their money, but will have to contact the regulator and prove ownership of the account. It could take weeks or longer to recover the money.
The measures announced last year by the government included increasing the threshold for "lost" super accounts under which they are automatically transferred to the ATO. Super funds have to transfer money from accounts to the ATO if they have been inactive, the owner cannot be contacted, and where there is less than $2000 in the account instead of $200.
There is a silver lining for those with lost super and bank accounts in this grab for money. Many "lost" super accounts are shunted by funds to eligible rollover funds, which can have annual fees of up to 7 per cent. Most big, well-run super funds have fees of less 1.5 per cent. The government will ensure that lost super and deposit accounts have interest credited at the inflation rate. Most deposit accounts earn much less than inflation, often not much more than zero interest. The moves help balance the federal budget because the government can invest the money in lost accounts for a higher rate of return than it credits.
To minimise the chances of losing track of super and deposit accounts, always ensure your bank and super funds have your tax file number and let them know when you change your address. And when starting a new job, let the new employer know which super fund you want the super guarantee paid into. Each super account has costs that are fixed, regardless of the size of the account. That is why it is important to consolidate your super accounts to save on fees and charges.
The changes will further increase the mountain of money that is in lost super and deposit accounts; ASIC's database of unclaimed money rose to $677 million in November, an increase of more than $40 million on 2011. It includes $330 million in lost accounts with banks, credit unions and building societies, $295 million in shares and $52 million in life insurance. During 2012, the regulator says more than 33,000 parcels of money were added to the database.
It is easy to check for this lost money. Go to ASIC's MoneySmart website at moneysmart.gov.au and click on the link to unclaimed money. There's more than $17 billion in superannuation waiting to be claimed through the ATO's SuperSeeker service, at ato.gov.au/superseeker.
Get it while you can
Waiting to be claimed in bank accounts, shares and life insurance
V IC: $143m
$2.9m Latrobe Valley
$4.2m Central Coast
More than $300,000
waiting to be claimed in:
Source: Australian Securities and Investments Commission