AUSTRALIA - The Australian Government has proposed super funds use tax file numbers (TFNs) to identify members' accounts to help recover the ‘lost' A$18.8bn ($19bn) in superannuation assets.
The draft legislation, known as SuperStream, will enable funds to use the TFN to identify member accounts from 1 July 2011. If passed, the initiative could save up to 25% on superannuation administration costs which amount to A$1bn per annum, research by Ernst & Young showed. An estimated 5.8 million super accounts are lost each year, meaning the superannuation fund has no way of contacting the owner. Members can currently submit their TFNs but cannot use it to identify accounts or assist with consolidation of accounts between and across funds, according to the draft.
Assistant treasurer and minister for financial services and superannuation Bill Shorten said: "This measure, honouring an election commitment, will make it easier for Australians to be re-united with their superannuation, whether it is sitting in a lost account or in multiple accounts in various funds."
The proposal has been supported by the Australian Institute of Superannuation Trustees and who said TFN verification would reduce administrative errors. The Association of Superannuation Funds (AFSA) also welcomes the legislation but said this is only part of the solution.
AFSA chief executive Pauline Vamos said: "There will be many issues to consider including how TFNs will be verified and whose role it will be - the employer or the fund? Super must, and needs to, have its own governance body in regards to data and payment standards. The banking and accounting industries have similar bodies and it is now time for the superannuation industry to also have one in recognition of its footprint across the economic landscape."
The proposal will be subject to strict privacy guidelines. Consultations will close on 17 February 2011.
Fidelity International has created global retirement savings guidelines to help employers and employees understand how much is needed to save for retirement, writes Kim Kaveh.
The Local Authority Pension Fund Forum (LAPFF) has announced the sudden death of its chairman, Ian Greenwood, on Monday (12 November) night at age 68.
Jonathan Stapleton wonders whether we need a thorough review of the principles for institutional investment decision-making