The government’s long-running campaign against unwanted superannuation accounts is bearing fruit, with 13 million duplicate accounts being closed or consolidated since 2015.
According to a new report from the Association of Superannuation Funds of Australia, the ongoing Protecting Your Super provisions – which funnel small and inactive accounts to the tax office and force the closure of eligible rollover funds – together with stapling provisions in the Your Future, Your Super reforms will lead to a further 2.5 million accounts taken off the list by January 2022.
“The Government is to be commended for the significant reduction in unwanted multiple accounts that has occurred,” the association’s Multiple Balances paper states. “Ongoing costs of unwanted multiple accounts are likely to be a modest amount a year from 2022 onwards.”
ASFA estimate will leave 22.5 million superannuation accounts in the system. 17 million of those are genuine, single member accounts and a further three million are considered “justified on objective grounds”, for example due to retained defined benefit funds or those retained to facilitate transition to retirement arrangements or for insurance purposes.
The remaining 2.5 million unwanted duplicate accounts is a sharp improvement from the roughly 12 million unwanted accounts estimated in 2015.
These remaining accounts still represent an unwanted cost, however; 2.5 million member accounts costing $40 each in fees per year will cost $100 million per year, ASFA estimates.
Despite the reduction in unwanted duplicate accounts, the number of lost and inactive accounts held by the Australian Tax Office remains “stagnant” at 5 million, the association reports.
“There is more work to be done to reduce the number of multiple accounts and to address the $3.6 billion in lost and unclaimed super which currently sits with the ATO,” ASFA deputy CEO Glen McGrea says.