It’s a situation that many small business owners have probably been in – when the business is feeling financial pressure you decide not to pay into your personal superannuation account.
While this decision might provide short term relief, in the long run bypassing these super payments could impact on your ability to plan for a secure retirement.
If you have been an irregular payer of your own super and have an inactive low-balance account, from 1 July 2019 new laws (known as the Protecting Your Superannuation Package) will require superannuation providers to report and transfer these accounts to the Australian Taxation Office (ATO).
What is an inactive low-balance super account?
If you haven’t made a super contribution in 16 months (or more) and your account balance is less than $6,000, your account will be considered as ‘inactive low-balance’.
What happens to my super account if it's inactive low-balance?
The balance of your super account will be consolidated into an eligible active super account via an ATO-initiated transfer.
As part of these changes, information about individual transferred balances will be publicly available from 1 November 2019 through the ATO’s online unclaimed super money (USM) register.
What impact could this change have on me?
Super contains important insurance cover, such as life insurance, which can provide your family with financial assistance if something happens to you. If your super account is closed as a result of these legislative changes, then you risk these insurance policies not be available for your family to access when they need it the most.
Why have these changes been introduced?
These laws have been introduced to protect an individual’s super accounts from being eaten away by fees and other charges. It also aims to reduce instances of duplicate insurance, where individuals may have multiple super accounts and be paying for duplicate insurance cover.
Visit the ATO website for information on these important changes to super.