New legislation came into effect this year which means all ERFs should be closed by the end of January, 2022.
The plan is to, where possible, return any funds to their rightful owners.
Most of this money has already been sorted but there is still some outstanding, and you may not even know if you are owed money from an ERF.
So here’s what you need to know, and what to do, if you think you could still have some money in an ERF.
How did ERFs work?
ERFs were essentially super holding accounts designed to receive small, lost or inactive super balances, or balances that belonged to people no longer eligible for membership of the original fund.
In most cases, a person’s super balance would be transferred to an ERF without them being consulted, as ERFs were mostly intended to receive small account balances for inactive or ‘lost’ super members.
ERFs tended to not charge fees because their main purpose was to hold lost or unclaimed super money until it could be reclaimed. That was helpful if there was only a small amount of money in a person’s previous super account that did charge fees.
The Federal Government said ERFs were intended to act as a temporary measure but in practice the money could languish in such funds for years. The Productivity Commission’s 2019 report into superannuation efficiency and competitiveness had recommended an end to ERFs.
What is the new legislation on ERFs?
The Treasury Laws Amendment (Reuniting More Superannuation) Act 2021 received Royal Assent on 22 March, 2021. The main aim of the Act is to see the closure of ERFs by 31 January 2022.
All ERF trustees have had to identify accounts with balances of less than $6,000 and report and pay them to the Australian Taxation Office by the end of June, 2021.
The rest, those accounts of $6,000 or more, must be reported and paid to the ATO by the end of January, 2022.
What happens if you had money in an ERF?
Once the monies are received, the ATO’s job is then to try to reunite the funds with the original owner. In theory, this should happen automatically on the member’s end.
That’s why it’s important your details are up-to-date with any super fund you may have had. You can check what super funds are linked to you via the Australian Government’s myGov online portal. If you haven’t already set up an account, now could be a good time to do so.
Your myGov account should show if the ATO is holding any money on your behalf. You can then opt to have that paid to your preferred super fund. The ATO may have already transferred the money to an active super account.
In some cases, you may be eligible to receive the funds directly.
If you do have a myGov account, now might be a good time to use itto check to see if you have any lost super. The ATO says about $13.8 billion was held as lost or unclaimed super as of June 2020.
You can lose track of your super accounts if you have ever changed your name, address, job or lived overseas.
If you know you have funds still held in an ERF then you could contact the fund directly and have the money transferred to your preferred active super account, or directly to you if you’re eligible.
Fee, performance and asset allocation information shown in the table above have been determined according to the investment profile in the Canstar Superannuation Star Ratings methodology that matches the age group you selected.
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