Why you need to protect your super before the June 30 deadline
June 30 is an important date on the financial calendar and this year it's especially significant if you want to sort out your superannuation.
On July 1 the federal government's Protecting Your Super package begins, meaning if you have an account (or multiple accounts) that's been inactive for 16 months and has a balance of less than $6000 its ownership will be transferred to the ATO.
However, time is on your side. While super funds are obliged to identify and report their inactive low-balance accounts to the
ATO from July 1, the transfer can occur up to October 31.
What this means, though, is the longer you ignore your inactive account the greater chance it has of being moved to the ATO. After October 31, the tax office will then attempt to consolidate the unclaimed super money into your active account.
But you don't have to wait for the tax office to do something. You can now link your myGov account to the ATO, see all your super details and amalgamate your savings.
An alternative is to contact the fund you want to move your entire super to and ask it to consolidate your accounts. Generally super funds provide a service where they will do this on your behalf.
If you don't have an active account, the ATO will still manage your inactive super. It won't charge fees and the inactive account will earn interest based on the consumer price index. However, this is likely to be less than the average super fund returns, meaning you would be better off consolidating.
There's more to the Protecting Your Super package than account consolidation. Inactive, low-balance accounts will also have life insurance switched off, so it's important to check whether you have (or want) a life policy once you transfer funds into the active account.
Further to this, if you have an active balance and it's less than $6000, investment and administration fees will be capped at 3% each year. Exit fees have also been wiped.
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