A Plan to Simplify and Streamline Superannuation
This chapter outlines proposals to make it easier for members to find any lost superannuation and transfer their superannuation to a fund of their choice.
Since 1 July 2004, members of most superannuation funds have been able to move their superannuation benefits into a fund of their choice, subject to some limited exceptions (portability). The Government further enhanced this policy of portability by removing, effective 1 July 2005, the exception which enabled funds to reject a portability request if employer contributions had been made to the fund in the past six months.
These initiatives on portability complement the introduction of choice of fund which allows employees to choose the fund into which future employer contributions will be made. Together, these measures give Australians greater control over their superannuation and also allow members to consolidate their superannuation benefits in one account, thus avoiding multiple sets of fees and charges.
Portability is further complemented by the Lost Members Register (LMR) maintained by the ATO. The LMR contains details of accounts that individuals may have lost track of (the actual money remains with the relevant funds). Individuals who may have lost track of their superannuation can search LMR (for free) to identify their accounts, and then, using portability, organise for those accounts to be consolidated if desired.
The Government’s initiatives on choice and portability have significantly improved the ability of individuals to manage and take control of their superannuation.
However, the Government considers there is scope to make transferring and consolidating accounts simpler and easier by further improving the operation of the portability and LMR arrangements.
Currently superannuation funds must transfer a benefit as soon as practicable after a request is received, and in any event within 90 days. It is proposed that the maximum time limit be reduced from 90 days to 30 days.
The 90 day time limit is retriggered if the fund seeks additional information from the member (that is, the 90 days will start again from when that information is received). It is proposed that these ‘retriggering’ provisions be removed so that in all cases benefits must be transferred within 30 days from the date of the initial request.
In addition, the process for requesting a benefit transfer involves completion of relevant forms and meeting any other requirements developed by individual funds. This means the level of information required, including information necessary to establish proof of identity, varies from fund to fund. This can further complicate the portability process. It is proposed that all funds use a standard form for portability requests including standard proof of identity requirements to ensure uniformity amongst funds. This would also potentially reduce the need for funds to seek more information from members which can delay processing.
9.2.2 Lost Members Register
In addition to providing facilities for individuals to search the LMR, the Government is also active in locating and contacting lost members whose address can be found using tax file number information. In this context, the ATO is in the process of undertaking a direct mail out campaign to approximately three million lost members advising them of the existence of their lost superannuation.
However, the Government considers that there is scope to improve further the operation and effectiveness of the current lost member arrangements. It is proposed that the ATO be given a more active role in arranging transfers on behalf of lost members. This would greatly simplify the consolidation process for members by reducing the need for their involvement.
Under such an approach, the ATO would write to lost members advising them of the existence of their lost account and offering them a number of choices, including consolidating the account with an active account, or indicating that they are satisfied with the account’s inactive status.
Where the member requests that their lost account be consolidated with an active account, the ATO would deal with the relevant funds and arrange the transfer on the member’s behalf. This process would be facilitated by the development of a standard portability form and standardised proof of identity requirements which could be included with the ATO mail out.