Second Reading SpeechMr SUKKAR (Deakin - Assistant Treasurer and Minister for Housing)
That this bill be now read a second time.
The bill will facilitate the exit of all eligible rollover funds from the superannuation system by 30 June 2021.
An eligible rollover fund is a superannuation fund that holds superannuation accounts of lost members and those with low account balances that are no longer receiving contributions. Eligible rollover funds were intended to temporarily hold these accounts in a low-fee, low-cost environment to avoid further balance erosion until they could be reunified with the member.
However, the unclaimed superannuation regime, together with the recent passage of government's Protecting Your Super package, mean that the eligible rollover funds have become redundant. Going forward, most eligible rollover funds are unlikely to remain commercially viable, because the Protecting Your Super reforms now redirect small inactive accounts to the ATO - accounts that may otherwise have been paid to an eligible rollover fund.
Additionally, the Productivity Commission's 2018 report Superannuation: assessing efficiency and competitiveness found that, overall, eligible rollover funds have not been successful in reuniting members with lost superannuation.
By contrast, the ATO's data-matching program has achieved outstanding results, far exceeding those previously achieved by eligible rollover funds. In just six weeks, the ATO reunited more than 2.1 million lost or forgotten superannuation accounts - worth around $2.8 billion - with their rightful owners in the end.
The Productivity Commission recommended that the ATO be responsible for holding lost accounts, and that APRA should oversee the wind-up of all eligible rollover funds within three years.
This bill gives effect to recommendation 5 of the Productivity Commission's report by allowing eligible rollover fund trustees to voluntarily transfer any amount to the ATO, with a requirement to transfer all accounts below $6,000 to the ATO by 30 June this year, and all remaining accounts to the ATO by 30 June 2021.
The deadline of 30 June 2021 for larger accounts provides sufficient time for funds to arrange mergers or transfers of members to put larger accounts in a new fund if a trustee decides that's in the best interests of members.
The ATO will work to proactively re-unify amounts it receives from eligible rollover funds, together with interest, to members' active superannuation accounts where possible, or in some cases directly to the individual.
These changes build on the successes of the government's Protecting Your Super package, passed by the parliament last year.
By reuniting these lost and forgotten accounts with their rightful owners, members will benefit from higher account balances and no longer be paying multiple sets of fees.
Through these changes, the Morrison government is building a stronger and more efficient superannuation system, improving outcomes for members.
Full details of the measure are contained in the explanatory memorandum.