Swannies 6 month $555 million interest free loan

Looking at the MYEFO released yesterday, most of the attention has been on the Baby Bonus reduction, and the Company Tax change to pay monthly instead of quarterly.

But for mine, the biggest (and dodgiest) change is the change to the inactive Superannuation account rules.

Basically the change is the Government authorizing the compulsory transfer of more small and inactive super accounts to the ATO by changing the definition of what a small, inactive account is. The change is from the previous rule of a balance of under $200 that hasn’t been touched in 5 years to a balance of under $2000 that hasn’t been touched in 1 year.

This is dodgy enough. But what really annoys me is the fact that while the Government has said it will pay interest at a rate of CPI, the interest only starts accruing in July 2013 (while the confiscation of the funds from the Super Accounts takes place in December 2012). So effectively, Swan is helping himself to an interest free loan, on the backs of people with inactive Super accounts of $2000 or less (likely to be the poor and financially illiterate). All for political ends.

And those poor people who get their Superannuation transferred? Well, they are going to be missing out on the interest they could have earned over that 6 month period.

Now some people will say, big deal. It's likely to be small amounts (likely to be 0.74% to 4% depending on the fund being retail or industrial). But this is still $20 to $50 being stolen from the retirement savings of those who will need every dollar they can save for retirement (and likely to be Labor voters)

Not quite Labor values in my opinion..