Explanatory Memorandum
(Circulated by authority of Senator the Hon Jane Hume, Assistant Minister for Superannuation, Financial Services and Financial Technology)Chapter 2 - Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020
2.1 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
2.2 This Bill amends the SIS Act, the RSA Act and the SUMLM Act to facilitate the closure of eligible rollover funds by 30 June 2021 and allow the Commissioner to reunite amounts it receives from eligible rollover funds with a member's active account.
2.3 An eligible rollover fund is a fund that is eligible to receive benefits rolled over from another fund without member consent (see section 243 of the SIS Act).
2.4 Eligible rollover funds are intended to be a temporary repository for small account balances or accounts belonging to persons that cannot continue to be a member of a fund (for example, because the member changes employment).
2.5 Currently, eligible rollover funds are able to transfer accounts to another superannuation fund where the member has an account with that fund and that fund has received a contribution in the last 12 months or through a successor fund transfer.
2.6 Similar to other superannuation funds, an eligible rollover fund is also required to transfer amounts to the ATO where requirements in the SUMLM Act are met, such as where the amount is unclaimed or is an inactive low-balance account.
2.7 In its report, Superannuation: Assessing Efficiency and Competitiveness the Productivity Commission found eligible rollover funds have not been successful in reuniting members with lost superannuation. The Productivity Commission recommended that the ATO be responsible for holding lost accounts and that APRA oversee the wind-up of eligible rollover funds.
2.8 Furthermore, the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019, introduced a new requirement for superannuation funds to transfer inactive low-balance accounts to the ATO. Broadly, an inactive low-balance account is a superannuation account where the superannuation provider has not received a contribution in the past 16 months and the balance of the account is less than $6,000. Historically, these accounts may have been transferred to an eligible rollover fund.
2.9 This Bill amends the SUMLM Act to require the balance of all accounts less than $6,000 held by eligible rollover funds to be transferred to the ATO by 30 June 2020 and the balance of all remaining accounts held by eligible rollover funds to be transferred to the ATO by 30 June 2021.
2.10 An eligible rollover fund is able to transfer amounts it holds to the ATO at any time up to these dates.
2.11 Where the Commissioner receives an amount from an eligible rollover fund, the Commissioner will be able to proactively reunite the amount with the member's active account.
2.12 The Bill also amends the SIS Act and RSA Act to prevent superannuation funds and retirement savings account providers from transferring new amounts to eligible rollover funds.
Human rights implications
2.13 This Bill does not engage any of the applicable rights or freedoms.
Conclusion
2.14 This Bill is compatible with human rights as it does not raise any human rights issues.