Brace yourself for good news – or at least potentially good news. There's a fair chance that you or someone you know – a spouse, friend or relative, say – may have a forgotten a stash of money lying around somewhere.
Got your attention? OK, not to get your hopes up, but it is a possibility. Most of the languishing loot is traceable to inactive bank accounts or unclaimed life insurance payouts. But if you switch super accounts as often as you switch jobs, part of your retirement nest egg may be gathering dust in a dark corner. About one in three Australians have lost touch with a super account, and there is about $17 billion out there in lost and unclaimed super.
How much dough are we talking?
The amount of unclaimed money sitting in inactive Australian bank accounts and life insurance policies has been as high as $677 million. Single unclaimed amounts as large as $992,750 have been reported by Australian Securities and Investments Commission (ASIC), and the top nine largest pots of unclaimed booty have added up to a staggering $5.5 million.
We're not saying you should quit your job and book a round-the-world tour just yet, but you may be entitled to at least a fraction of those unclaimed funds. One consumer told us a happy story of reclaiming $7000 from various super accounts chosen by her employers over the years.
Defining "unclaimed" – from seven years to three
It's a government policy that unclaimed funds are transferred out of inactive accounts to prevent the money from being eroded by penalties and fees. But the timeframe has been drastically reduced in recent years.
In 2012, the definition of "unclaimed" changed from seven years to three – a move that attracted a fair amount of criticism. The shorter time limit certainly makes it difficult to have a set-and-forget approach to savings accounts.
Where does the money go?
Unclaimed money gets gathered up by the ASIC, but don't worry – they're not allowed to spend it!
The funds might be deemed "unclaimed" in a hurry, but there's no time limit for reclaiming them. And money that's been unclaimed as of 1 July 2013 will be paid interest.
But who forgets about money?
One of the most common reasons for missing out on money that's rightfully yours is a change of address. The financial institution may have tried to notify you, but you never got the letter.
You may have unclaimed money if you:
- haven't made a transaction on your account for over three years,
- stopped making payments on a life insurance policy,
- moved without leaving a forwarding address,
- have noticed that regular dividend or interest cheques have stopped coming, or
- were the executor of a deceased estate.
To avoid having your savings chucked on the unclaimed pile, all you have to do is make a single transaction at least once every three years.
How do I find my dough?
Since ASIC collects the unclaimed money (technically it's stored in the Commonwealth of Australia Consolidated Revenue Fund), they should be able to help you find it.
ASIC's Unclaimed money search has proven an effective tool for reuniting people with their long lost cash. All you have to do is enter your name. The process takes 28 days. In addition, ASIC's Unclaimed Monies Unit sends letters to people and companies whose names come up in its records.
Don't pay a fee
Several companies (some quite dodgy) recover unclaimed money for a fee; others offer to locate lost super and roll it into their preferred super fund in return for a percentage commission from the new fund. But there's no need to pay a fee to a company to recover your unclaimed funds. Do it yourself – it's easy and free.