Coalition Senators' Dissenting Report
More than half the Gillard Government's promised surplus for 2012/13 is
to be achieved through increased revenue from this, the Treasury Legislation
Amendment (Unclaimed Money and Other Measures) Bill 2012.
Indeed, over the six months from 31 December 2012 to 30 June 2013, the
Government intends to raise more than $760 million in additional revenue from
measures in this Bill.
The 'lost super' measure alone (Schedule 4) is expected to raise
$555 million, which on its own is more than half the promised $1.077 billion
surplus for 2012‑13.
The undue haste and lack of proper process followed in developing these
measures is obviously driven by the Government's desperate and urgent need for
more cash now to help keep the illusion of a surplus in 2012‑13 alive for
a bit longer.
If there was any doubt that the Government was in a rush, to get this
legislation through to help plug its latest budget black hole, people need to
look no further than at the transcript of the public hearing of this inquiry on
12 November 2012.
While there is some merit in some of the measures proposed, this is
largely wiped out by the rushed, ill-considered and disorderly manner in which
they are being pursued.
The interests of consumers – account holders in this context – should be
the paramount consideration in terms of assessing the merits or otherwise of
this Bill. The Parliament should not be rushed into making bad decisions just
to respond to the desperate need for immediate additional cash for a Treasurer
who, on the back of excessive spending, has already delivered four deficit
budgets, with $172 billion of accumulated deficits, and who is manifestly on
track to deliver his fifth budget deficit in a row.
In this context, any legitimate interests of, and challenges faced by,
industry stakeholders (account providers) should also be respectfully taken
Unnecessary costs and inefficiencies, which while imposed on account
providers, will ultimately be borne by consumers, and as such should be
avoided. The rushed nature of both the consideration of this Bill and its
subsequent implementation are clearly likely to contribute to unnecessary
mistakes, unintended consequences and increased costs and uncertainties. This
would ultimately be to the disproportionate detriment of consumers as well as
The stated objectives are sound:
- to prevent erosion of small lost or inactive account balances
(from fees and charges); and
- to reunite unclaimed balances with their owners.
However, the delivery of this Bill is poor, rushed and ill-considered.
Moreover, the underlying motivation for this Bill and its haste is blatant and
should not prevent the sound broader objectives of the Bill from being met.
Account providers (be they banks, super funds, insurance companies or
other financial institutions), are having rushed and ill-considered measures
imposed on them, without adequate warning or consultation, and without
awareness and understanding of their current systems and processes, or any
system and process limitations.
Based on the evidence, it is quite clear that account holders in certain
specific, but not uncommon, circumstances have not been properly considered.
And the scope of the accounts affected is not clearly defined or articulated.
These measures are the types that require in-depth consultation with the
affected institutions beforehand, to ensure that what is being proposed is
doable, hits the mark, and meshes in with what is being done in the industry
already, with minimal unintended consequences.
In fact, on 13 November 2012 (just last week), the Assistant
Treasurer in his Melbourne address to the CCH Corporate Tax Managers Network
was touting the virtues of extensive consultation with industry and the
community. He said:
Consultation plays a vital role in Government decision
making. In a complex area like tax law it is particularly valuable.
When developing policy, consultation can assist the
Government to understand the commercial and practical issues relevant to
particular industries. This can provide the Government with a broad
understanding of the options for reform. 
Proper consultation has clearly not occurred with this Bill.
Much of the law relating to these measures is to be included in the
regulations to the various Acts. But these regulations have not yet been drafted.
Account providing institutions affected by these proposed amendments will therefore
have even less time to get across the changes and implement them (including
updating systems and appropriately interacting with potentially affected
Moreover, due to the concerns raised in submissions and the public
hearing by industry groups – concerns which Coalition Senators agree need to be
worked through – these regulations are likely to be even further delayed
(compressing lead times even more).
Further, as interest is not payable by the Government on account
balances deemed ‘unclaimed’ and transferred to Consolidated Revenue until
1 July 2013, it is reasonable to not rush the round-up of these
balances to Consolidated Revenue, especially when the risks of unintended
consequences are so high.
Given the number of problems raised concerning the legislation, the
Coalition Senators of the Committee consider that the sensible decision would
be for the Government to withdraw the legislation and undertake further
Failing that, the Coalition Senators consider that the implementation
dates of Schedules 1, 2 and 4 should be delayed.
This schedule amends from 7-years to 3-years the inactivity test for
bank accounts in Section 69 of the Banking Act 1959 (Banking Act). After this
period of inactivity, the amount in the account (the balance) is deemed to be ‘unclaimed
money’ and will require the bank or financial institution providing the account
(account provider) to transfer the balance to the Australian Government’s
Consolidated Revenue Fund (Consolidated Revenue).
Upon transfer to Consolidated Revenue, the Australian Government’s
revenue will be increased (by the amount transferred). If or when claimed,
payment to the owner (or nominated account) will come from funds appropriated
by Parliament for that purpose.
A number of concerns were raised about this reduction by 4-years in the
inactivity test period, which Coalition Senators share and recommend should be
addressed before this Bill is passed by the Parliament.
Delay implementation for at least
6-months (and preferably 12-months)
The timing of these changes is too rushed and unrealistic. As the Australian
Bankers’ Association testified in their submissions and at the public hearing
before the Senate Economics Legislation Committee, the 31 December 2012
deadline to apply the new rules to inactive accounts (3-years instead of
7-years) is not feasible without unreasonable risks of mistakes, extra
compliance costs and even a complete shut-down for a day or so near Christmas. This
is not a position they want to be put in and would clearly expose their
customers to unnecessary inconvenience.
Currently, banks do this testing annually well before the Christmas
period. According to the evidence banks had completed this year’s testing before
the 22 October 2012 Mid-Year Economic and Fiscal Outlook (MYEFO)
Even though the transitional rules allow the reporting and transfer of
the unclaimed money by 30 April 2013 (4-months later), the deeming of those
account balances as unclaimed money is the most difficult part – it requires systems
changes and appropriate interaction with their customers. This is to ensure
specifically that all relevant customers who are likely to be captured by this
dramatically shortened period are appropriately warned with reasonable notice.
In its submission to the inquiry, the Australian Bankers' Association
...the proposed timing for implementation and a commencement of
31 December 2012 is unrealistic, being in less than 2 months and falling
during a period when banks implement freezes on any technology or IT systems
changes. It is estimated that banks and other ADIs will require at least 6
months to make all the necessary changes, inform customers in a legally
compliant manner, and meet compliance requirements. It should be noted that
individual banks and other ADIs will have different implementation issues.
Therefore, the Australian Bankers’ Association believes that
a 12 month transitional period for compliance is appropriate to ensure the
legal, technical and practical issues can be addressed and ensure that the new
regime can be streamlined into the existing annual process without disrupting
banks’ systems or bank-customer relationships. If the Government is minded to
make any changes to the existing unclaimed monies provisions, we consider that
this transitional period is necessary for the following reasons:
- Regulations are not made and are required to clarify the
application of the new unclaimed monies provisions, including exclusion of
certain account types and confirmation of inactivity period (which is created
by the reduction in the unclaimed monies period);
- Annual processes are already underway and should not be disrupted
or required to be commenced again. Account identification and customer
communications approaches should be streamlined and adjusted for the next
- Disclosure, contractual and other changes should not be
prohibitive or cause legal interpretation issues for banks, including Code of
Banking Practice, etc; and
- Banks should not be required to implement intensive projects
within tight timeframes and/or to allocate resources during technology and IT
systems freezes. 
Further, the Australian Bankers’ Association told the Committee that the
... seems to have been developed and pushed through the
parliamentary process with undue haste. While the changes in the legislation
appear straightforward, they do in fact have significant implications for banks
and for bank customers ...
Given all of these complications with the bill, we suggest
that more time is needed to work through the details and to allow banks and
customers to adapt to the new requirements and to run the changes with next
year's scheduled annual [unclaimed moneys] process.
Inactivity test and what accounts
While inactivity of a bank account for 7-years is unusual, and is likely
to be a good indicator in most circumstances that the holder is in effect ‘lost’
to the account, reducing the test to 3‑years risks unintended
consequences in many more circumstances. As such, Coalition Senators consider
that this 4-year reduction is too drastic and that exclusions in certain
circumstances (even discretions for account providers) are required to keep
unintended consequences to a reasonable level.
3-years is too short
First, the 3-year inactivity test for bank accounts is too short and
needs to be reviewed to consider whether 5‑years would be a more
- Australians being posted overseas (including their spouses) and
intending to resume using their accounts when they return – this is often more
than 3‑years (but less than 5‑years);
- Accounts owned by children (or set up for children to put their
savings in) that do not make a contribution within 3‑years; and
- In the case of First Home Saver Accounts (FHSAs), hard times can
mean that contributions are not made for at least 3-years.
Many account types should be
The new rules should only apply to accounts that earn very low (or zero)
interest. These are typically at-call accounts. As such, internet accounts
and term deposits (including those that rollover upon maturity) – both of which
tend to earn significant interest – should be excluded. Otherwise, account
holders will likely be disadvantaged by receiving a lower interest. This risk
is borne out by the submission from the Commonwealth Bank of Australia (CBA):
A high level analysis by CBA indicates that the majority of
account balances at CBA which would be impacted by the proposed changes to
unclaimed monies currently receive an interest rate higher than the CPI linked
rate which the Bill proposes to be paid on those balances once transferred to
Also, linked accounts and offset accounts should be excluded too, so as
not to disturb the customer’s broader banking arrangements and strategy.
Indeed, it is entirely conceivable that many Australians would have money
sitting in an offset account against a loan on their principal place of
residence. While there may be no activity in the account and no interest earned
on any amount held in the account, this sort of common arrangement would help
an account holder to reduce interest payable on their home loan in a tax‑effective
and entirely appropriate way. Yet under the legislation as it is currently
drafted, such an offset account, with funds left in it to offset interest on a
home loan account, could be captured by the Government and be transferred into
Inactivity should be tested at the
account holder level
If an inactive account is held by a customer who has one or more active
accounts with that bank (strongly suggesting the customer is still alive and
engaged with the bank), then the balance in the inactive account should not be
deemed ‘unclaimed’ and transferrable to Consolidated Revenue. As such, where a
customer holds multiple accounts with the bank, the inactivity test should be
elevated to the level of the customer, to help avoid unintended consequences
As ING Direct explained in its submission, the current requirement for banks
and other financial institutions to consider activity on an account-by-account
basis, as opposed to a single customer activity basis, will force ING Direct
...advise active customers who regularly transact on some, but
not all, of their accounts, that unless they transact on each of their deposit
accounts at least once every 3 years we'll have to close them and pass the
money to ASIC.
The Terms and Conditions that apply to our savings accounts
do not currently mandate that a customer must transact on their accounts at
least once every three years. Making changes to our Terms and Conditions may
lead to ASIC investigating us for misleading our customers. We would require an
assurance from the Government that this would not be the case should the
Committee pass the Amendment Bill in its present format.
If, on the other hand, the Amendment Bill was passed taking a
single customer view, we believe the majority of accounts would not be affected
as most of our customers are active on at least one of their accounts.
This will lead to extra inconvenience and compliance costs for both
customer and institution.
According to a blog posted by The Hon Bernie Ripoll MP (Parliamentary
Secretary to the Treasurer) on 14 November 2012, it is very easy to be caught
by these rules:
One of the most common causes of lost accounts is people
moving house and forgetting to update their address details with their bank or
credit union. It is an easy thing to do.
It is also easy to lose track if you change names, or if you
live overseas for a time, change jobs, forget how many accounts you have, or
forget to tell your loved ones about the accounts you do have.
For those that have been shopping around with their banking in more
recent times (encouraged by the Treasurer and Government), it would be even
easier to have an account balance deemed ‘unclaimed’ and transferred to Consolidated
This schedule amends also from 7-years to 3-years the inactivity test in
the First Home Saver Accounts Act 2008 (FHSA Act) for FSHAs held by FHSA
providers under the FHSA Act.
Coalition Senators consider that this 4-year reduction also increases
unreasonably the risks of unintended consequences.
- FHSA holders that face challenging times may not be able to make
contributions for at least 3-years.
In its submission and at the hearing, the Australian Bankers’
Association recommended that the FHSAs should be excluded, arguing that:
...customers generally find these accounts and the restrictions
and conditions confusing. Apply the unclaimed monies provisions would add
additional complexity, especially given the 4 year qualifying rule. Similarly
to fixed products [such as term facilities and deposits], we consider that any
new unclaimed monies provisions should only apply to at-call account types
which satisfy the definition for inactivity.'
Regarding Schedule 1 and 2 in particular, Coalition Senators strongly
consider that the proposed 3‑year inactivity test for bank accounts be
reviewed to consider whether 5‑years would be a more appropriate
duration. Also, that more consideration be given to the type of accounts
tested, and whether the test should apply instead, or in effect, at the
Coalition Senators also strongly consider that the proposed amendments
to Schedules 1 and 2 of this Bill be delayed for a full year (to 31
- To allow sufficient time for proper consultation, so the critical
issues raised since the 2012-13 MYEFO announcement can be addressed and
any changes implemented properly; and
- To ensure the changes can feed into banks’ annual processes,
which had largely been completed by the time of the MYEFO announcement.
Schedule 4 to the Bill amends the Superannuation (Unclaimed Money and
Lost Members) Act 1999 (SUMLM Act) to change the circumstances in which small
lost member accounts and accounts of unidentifiable members must be transferred
to the Australian Taxation Office (ATO), and to provide for the payment of CPI
interest on unclaimed superannuation money.
The amendments will increase the account balance threshold below which
accounts of lost members are required to be transferred to the ATO from $200 to
$2000. The definition of a 'lost member' is set out in the Superannuation
Industry (Supervision) Regulations 1994. The current regulations define a
member of a fund as a lost member if:
a) the member is uncontactable
– that is, the provider has never had an address for the member, or two written
communications to the member (or one written communication if the trustee so
chooses) has been returned to the provider unclaimed; or
b) the member's account has not been
active for 5‑years.
The policy rationale for this change is that transferring small lost
member accounts to the ATO would protect these accounts from being eroded over
time by fees and charges. As the Parliamentary Secretary to the Treasurer explained
in his second reading speech, these fees and charges typically exceed average
investment earnings on small accounts, even for accounts with $2000.
The amendments will also decrease the period of inactivity before
accounts of unidentifiable members must be transferred to the ATO from 5‑years
to 12‑months. Accounts of unidentifiable members are accounts where the
provider is satisfied 'that it will never be possible for the provider, having
regard to information reasonably available to the provider, to pay an amount to
the member.' These accounts, according to the Parliamentary Secretary's second
reading speech, 'represent only a tiny proportion of superannuation—in fact,
less than 0.1 per cent.'
Coalition Senators accept the justification for increasing the $200
threshold for small account balances to $2000 – that this is around the level
below which account erosion becomes likely. However, this tenfold increase to
the threshold makes it much more critical that existing problems in the current
regulations are resolved. Many of these problems appear not to have been
considered while producing this Bill but will now be in real need of redress.
Update for modern communications
The 18-year old definition of ‘lost member’ – which can pivot on the
member being ‘uncontactable’ by written communication (either no hard mail
address or letters twice returned to sender/provider unclaimed) – is
problematic and needs updating.
In the modern era, engagement with members can also occur through email,
website, call centre and mobile phone. Through these means, members can give
clear instructions to their super fund to continue to hold their account and
balance. However, if hard mail communications have failed in the background,
then the existing regulations require the account provider to deem the money in
the account as lost and unclaimed, and have it transferred to Consolidated
Revenue despite the clear intentions of the member. With the new $2000
threshold, such unintended consequences are likely to become unacceptably
Protection of active ‘lost’
accounts, minimum 2‑year test, and reducing churn
Such deeming and transfer of money to the ATO and Consolidated Revenue can
occur currently on the basis of two failed written communication attempts by
the super fund, even when the ‘lost’ account is still receiving contributions,
or recently received a rollover from the member.
In its submission, the Australian Institute of Superannuation Trustees
notes that the problem of transferring such ‘active’ accounts to Consolidated
Revenue is ‘most likely to impact new employees, young people, and low-income
earners’ as these contributing members typically take the most time to
accumulate account balances above $2000. For example, a member needs to earn
over $22,222 in a 6‑month period to receive contributions of $2000. Many
people are on that income or below, and 6‑months is long enough for two
failed written communication attempts from a super fund to have occurred.
Under the existing $200 threshold, only in very rare cases (ie tiny
contributions) could active accounts be deemed lost and transferred
undesirably to Consolidated Revenue. This illustrates how the tenfold increase
to the threshold magnifies the existing problem with active ‘lost’ accounts,
which will affect mainly new starters, the young and low-income earners.
To help guard against active accounts inadvertently being deemed ‘lost’
and their balances transferred, the Australian Institute of Superannuation
Trustees and the Financial Services Council recommended that the regulations
stipulate a minimum 2‑year period of membership before a member can be
treated as ‘lost’. Moreover, that this 2‑year clock is reset when the
member account receives a contribution or rollover, or contact has occurred
with the super fund (including via email, website, phone or call centre).
Further, if the member of an inactive account informs the super fund
that he/she wishes to keep the account, albeit inactive, then it should be
excluded from being deemed ‘unclaimed money’ and transferred to Consolidated
The ICAA submission to the inquiry supports this view:
We believe that the ability for members to continue to hold
an inactive account is appropriate where the fund is able to provide them with
information about their fund (ie provision of annual statements to a correct
address) and/or that person proactively elects to be a member, albeit inactive. 
Such a 2-year threshold would also help prevent costly ‘merry-go-round’
of money or churn, which is bad for members and the industry. This can occur
where an active ‘lost member’ account is closed and transferred, resulting in
the next employer contribution triggering the creation of a new account and, in
turn, the ATO being required to transfer the unclaimed money back to the new
account. The Opposition considers this 2-year safeguard is most reasonable.
Cross-over with previously
announced Super reforms
Super funds are currently doing their ‘auto-consolidations’ under the
SuperStream reforms (due to be completed by 1 January 2014). The
proposed amendments currently in the Unclaimed Money Bill operate on similar
accounts but have to be processed by 31 December 2012 – in effect, a full
year earlier. This cross-over, yet lack of alignment in timing, will create unnecessary
difficulties for super funds (and unnecessary risks of mistakes and churn).
The Association of Superannuation Funds of Australia told the Committee
that this overlap would likely lead to money transferred from super account
providers to the ATO needing to be transferred back again under the proposed
We expect that quite a bit of the money flowing into
unclaimed monies as a result of this measure will subsequently flow out as the
ATO reunites those accounts with the members on the lost members register.
This would seem to be a completely ridiculous situation which is
manifestly not in the public interest.
In its submission, Mercer suggests a more efficient approach, than
currently outlined in the Bill, would be to delay the measures in Schedule 4
and integrate these changes with the Government's account consolidation
measures currently being developed.
Without the desperate need for revenue this year, the timing of these
overlapping processes could be, and manifestly would be, aligned – for the
benefit of all stakeholders, and in particular, for Australians with up to
$2,000 of super in one or a number of their accounts. The Government's
desperate need for immediate additional cash is what is clearly driving the
time table for this measure.
Loss of insurance coverage upon
account balance transfer
Submissions from Association of Superannuation Funds of Australia and Australian
Institute of Superannuation Trustees noted that lost members will also lose
insurance coverage when their account balances are transferred to Consolidated
Revenue. For accounts nearer to $2000, there is often sufficient money for
insurance coverage to be maintained for many years. (The Association of
Superannuation Funds of Australia submission notes that a 25-year old member in
an industry fund may have $300,000 of life insurance cover for about $150 per
annum.) This aspect has been made more critical by the tenfold increase to the
threshold and the greater risk of active ‘lost’ accounts being unintentionally
transferred. The solution to this issue is not straight forward and will need
some consideration and consultation. (Simply excluding accounts with insurance
attached may prevent too many accounts from being transferred to Consolidated
Association of Superannuation Funds of Australia told the Committee that
a significant number of members could be affected by the loss of insurance
coverage when their accounts are transferred to the ATO:
Given the indications that we have—and the numbers are not
entirely exact—up to 1.5 million accounts will be affected by the measure in
the bill. Some of the indicators that we have suggest that up to one-third of
those accounts might have active insurance. A considerable number of accounts
will be closed as a result of the measure, including some active accounts which
do not have alternative accounts and ones that are the only source of insurance
2-year test for ‘unidentifiable’
The reduction from 5-years to 12-months in the inactivity test for super
accounts whose members are ‘unidentifiable’ (eg member’s name, address and tax
file number is missing) is very significant and quite possibly excessive. Given
our recommendation that a minimum 2-year period for membership be introduced before
a member can be treated as ‘lost’, it is recommended as more practical to align
these two thresholds to allay confusion and save on compliance costs.
Aligning threshold for member
protection of small amounts with new $2000 limit
Consideration should be given to aligning the current $1,000 threshold
for member protection of small amounts (so these accounts don’t go backwards or
erode) with the new $2000 limit. However, this could only happen in this Bill if
the amendments are delayed to ensure consultation with industry and proper consideration
is given to the merits of such an alignment. This would ensure industry is able
to process these and all other changes in an orderly manner.
Notwithstanding the problems in the proposed amendments as drafted (or
the underlying problems in the existing regulations that they accentuate), the
Explanatory Memorandum to the Bill is deficient in key areas and needs further
work and explanation.
The ICAA submission to the inquiry supports this view:
We do not believe that that the current explanatory
memorandum (EM) for the Bill adequately explains the operation of these
measures. A person is able to hold a super account in which no contributions
are made for greater than five years and ensure that the fund will not
determine that it is a lost account. It is our understanding that in Example
4.2 of the EM, Poppy would not necessarily be categorised as lost member if her
fund had within the last two years verified that her address was correct and
had no reason to believe it was now incorrect, or Poppy had notified the fund
of her wish to continue as a member. Examples such as this may explain some
confusion as to the operation of the new measures. 
Regarding Schedule 4 in particular, Coalition Senators strongly consider
that the proposed amendments to Schedule 4 of this Bill be delayed for a
full year (to 31 December 2013) to address the critical issues raised since the
announcement of this measure and to align the timing of their implementation
with that of the auto-consolidation processes under the SuperStream reforms
(due 1 January 2014).
Coalition Senators are deeply concerned about the impact these
amendments as currently proposed will have on account holders and providers in
terms of the unintended consequences and the unnecessary extra churn and
compliance costs that will occur.
Coalition Senators consider that the Government does not sufficiently
appreciate the extent of many of the shortcomings of, and practical
difficulties caused by, this Bill. If these shortcomings are not addressed,
unreasonable unintended consequences, while completely unnecessary, are
In summary, regarding bank accounts of customers, further consultation
needs to take place to ensure:
- that banks and other financial institutions are not required to
rush these changes in, exposing their customers to mistakes, inconvenience and
unnecessary additional costs. It is entirely unreasonable to impose a
requirement to have all the necessary deeming done by 31 December 2012, so
that reporting to ASIC and payments to Consolidated Revenue can in turn occur
by 30 April 2013, so that funds received by the Government can be
processed in time for the 2012‑13 financial year, solely to help the
Government meet its wafer thin promise of a $1.077 billion surplus;
- that the proposed 3‑year inactivity test for bank accounts
be reviewed to consider whether 5‑years would be a more appropriate
- that only very low interest and ‘at-call’ accounts be tested for
- that, where an account is found to be inactive, the inactivity
test also be applied at the account holder (customer) level – to test if the
holder has other accounts, at least one of which is active, that would suggest
engagement is still intended; and
- that the amendments (including those to the associated
regulations) and explanatory material be improved and made consistent with how
the legislation is intended to work, before banks and other financial
institutions are expected to implement the changes.
Regarding super accounts of members, further consultation needs to take
place to ensure:
- that the 18-year old definition of 'uncontactable' be updated to
take into account modern technology and communications, such that active super
accounts are not inappropriately deemed 'lost', with their balance then having
to be transferred to Consolidated Revenue;
- that active accounts (eg those receiving contributions or
rollovers) cannot be deemed 'lost' within 2-years of their last contribution or
rollover (as recommended by industry);
- that the proposed 12-month test for super accounts whose members
are 'unidentifiable' be aligned with the minimum 2-year inactivity test (as
recommended by industry);
- that the problem of loss of insurance attached to (especially
active) accounts when the balance is transferred to Consolidated Revenue be
properly considered and addressed (and not dismissed);
- that Super funds not be required to rush these changes, so as to
report the results to the ATO by 31 December 2012, so payments to Consolidated
Revenue can in turn occur in 2012‑13, solely to help the Government meet
effectively half of its forecast $1.1 billion surplus;
- that the cross-overs and synergies of these proposed super
amendments with the previously announced SuperStream reforms (the
auto-consolidation measures) that are due to be implemented by 1 January 2014
(a full year later) be given further time and consideration (as Treasury
endeavours to do);
- that the amendments (including those to the associated
regulations) and explanatory material be improved and made consistent with how
the legislation is intended to work, before Super funds are expected to
implement the changes; and
- that the threshold for member protection of small amounts
(currently $1000) be considered for alignment with the new $2000 limit.
All these shortcomings can be addressed, given further consultation and
amendment, to ensure that the sound objectives of reducing account balance
erosion and reuniting these balances with their owners can occur with fewer
inadvertent transfers to Consolidated Revenue and other unintended
Coalition members of the Committee make the following recommendations:
That the Government withdraw the Bill so that further
consultation can occur on a range of issues, including:
dates of all schedules, with particular attention to
Schedules 1, 2 and 4;
appropriate duration for the inactivity test for all schedules, with particular
attention to Schedules 1, 2 and 4;
for the inactivity test to only apply to low or no interest accounts;
for the inactivity test to apply at the customer level, rather than the account
the definition of ‘uncontactable’ as regards superannuation accounts; and
problem of loss of insurance in superannuation accounts.
That the Explanatory Memorandum be improved and made consistent
with how the legislation is intended to work.
That the revised Bill and associated regulations be developed and
introduced well in advance of any new implementation dates.
If the Government does not withdraw the Bill, that the Bill be amended
to delay implementation of:
and 2 for a full year (to commence on 31 December 2013) to feed into the banks’
annual processes that had largely been completed for this calendar year when
the MYEFO announcement was made; and
for a full year (to align with the deadline of the auto-consolidations
necessary under the previously announced SuperStream reforms, which are due by
1 January 2014).
Senator Mathias Cormann
Shadow Assistant Treasure
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