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Pensioners lose savings in government cash grab

Date

Esther Han, Inga Ting

The federal government has bagged an unprecedented $360 million from household bank accounts since a controversial change to unclaimed money laws, figures from the Australian Securities and Investments Commission show.

Pensioners and others saving for a rainy day have reported trying to access their savings only to discover their money had been seized by the government because it had been dormant for three years or more.

The government has collected more money from inactive bank accounts under the three-year rule than the total amount captured in the past five decades combined.

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When government takes your money, literally

The government takes away Kim Taylor's money from her bank account because she hadn't touched it in more than three years

PT0M0S 620 349

Nearly $360 million from 80,000 accounts was funnelled into government coffers in the year to May after Labor lowered the threshold, eclipsing the $330 million netted between 1959 and 2012, during which time idle accounts could only be touched after seven years.

The Treasury now looks poised to raise the threshold in the face of fierce lobbying from the banking industry, with Finance Minister Mathias Cormann releasing a discussion paper on changing the definition of inactivity from three years to five. Such a change would halve the number of inactive accounts taken by the government each year, he said.

"These changes caused substantial disruption to account holders … and to industry, with businesses forced to rapidly implement new and costly systems. We want to reduce the regulatory burden of these laws."

"We have grandparents who put money aside for their grandkids' future ... but it was transferred to the government": Steven Munchenberg.

"We have grandparents who put money aside for their grandkids' future ... but it was transferred to the government": Steven Munchenberg. Photo: Justin McManus

Australian Bankers' Association chief executive Steven Munchenberg said the legislation was a "rushed" budget-boosting exercise that angered customers whose accounts were in fact not lost or forgotten. "We have grandparents who put money aside for their grandkids' future … and farmers who have set aside money for a rainy day, but it was transferred to the government," he said.

He dismissed suggestions the banks wanted to reduce the flow of money to shore up their revenue. "To you or I, hundreds of millions of dollars might be a lot of money, but when you're looking at the funding level of banks, it's all trivial."

But consumer group Choice said it supported the three-year provision because high bank fees could "eat away" at inactive accounts.

"Extending the period of time unclaimed money could remain in an inactive account … is not in a consumer's best interests. Missing money shouldn't be whittled away by industry through penalties and fees," said spokesman Tom Godfrey.

ASIC said the chief purpose of the laws was to reunite people with lost accounts before funds were eroded by fees, charges and inflation. It refused to detail how much had been successfully claimed in the past year, but in 2012 ASIC returned $62 million, of which $33 million was from inactive bank accounts.

Kim Taylor, a marketing consultant from Randwick, deposited a few thousand dollars into an ING account with the intention of leaving it aside and letting it accumulate interest. Now the balance sits at zero.

''I wanted the money to sit there as a maternity leave thing. I left it there thinking that's my little luxury nest egg. I have four children under the age of nine, and I work full-time; getting the paperwork sorted to get the money back has been painful.''

Connie Franze, 68, and her son Vince, 45, are trying to reclaim their life savings of more than $12,000 that was taken by the government last June. ''I saved for 45 years … It was my carer's pension and his disability pension,'' said the retiree from Hurstville.

Ms Franze opened the Commonwealth Bank account 45 years ago, squirrelling away a small portion of her $50-a-week earnings from growing and selling plants. The pair were saving for a trip to Italy to visit her mother.

''She was 100 years old. I wanted to take money out. They wouldn't give me the money … [and then] my mother died this year. The last time I saw her was 20 years ago.''

Last Wednesday, Edward Manning, 62 of Oakdale, reclaimed a "substantial" sum that had been transferred to the government in March. The Citibank account held his inheritance. "For two months we had to draw back on our mortgage and the mortgage has increased … It was frustrating," he said.

The amounts seized from individual accounts range from a few cents to close to $2 million, although more than 90 per cent are worth less than $5000.

Nine accounts, all seized in June last year, were worth more than $1 million each. One woman from Caulfield, Victoria, has lost nearly $5 million across five different accounts.

The public can conduct quick, free searches for lost money on ASIC's MoneySmart website. It can scoop up records of unclaimed money from bank accounts, life insurance policies and company shares.

If you find money that is yours, approach the bank to have the claim verified. The bank will notify ASIC. Owners are paid interest on lost money based on the percentage change in the Consumer Price Index, payable from July 1 last year. No tax has to be paid on the interest earned.

Do you know more? Has the government taken your money? ehan@fairfaxmedia.com.au

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144 comments

  • This sucks pure and simple. And why so difficult to get it back?

    Commenter
    A country gal
    Date and time
    June 10, 2014, 7:32AM
    • It should be simple - anyone producing a statement or a bank book should have their money returned by the government, with accrued interest.

      Commenter
      Ross
      Location
      MALLABULA
      Date and time
      June 10, 2014, 8:19AM
    • Governments have been stealing money from their citizens for nearly a century now. They have become very good at it.

      Commenter
      Lewis
      Location
      Sydney
      Date and time
      June 10, 2014, 9:19AM
    • Is it even constitutional?

      Commenter
      pb
      Date and time
      June 10, 2014, 10:15AM
    • This is nothing less than pure theft. NO government has the right to take money which does not belong to it. I hope the Pensioners Assoc. goes ballistic on this and embarrasses Abbot and his minister until they go a dark shade of cherry.

      Commenter
      Peter
      Location
      Brisbane
      Date and time
      June 10, 2014, 10:16AM
    • A lot of this seizure of unclaimed moneys by the Gummint is bureaucratically inept. Many of the amounts reported are as little as 5 cents, they remain on the record and to claim the amount back you need to fill out three pages of forms. There should obviously be a minimum amount before money is declared as unclaimed. Small accounts under $2 in an inoperative account should be written off. Many amounts also belong to accounts where the same account holder has other active accounts with that institution, which then should obviously not be treated as unclaimed. That person wouldn't have carked it or disappeared from the face of the earth. A lot of time and money wasted for no practical result for either the institution or the account holder.

      Commenter
      DaveB
      Date and time
      June 10, 2014, 10:22AM
    • Yes ACG it does suck and the money should be easy to get back on proof of identity from any government office such as a Post Office or Medicare.

      The banks also suck, they suck accounts such as these dry over time with fees and charges.

      If a system of easily retrieving the funds was set up and the bond rate of interest paid then I would much prefer the monies to be in the hands of the federal government.

      Don't be sucked in though, this puff piece is aimed at getting the banks back their dormant accounts and is backed by the corporate party, the LNP.

      Commenter
      Paul01
      Location
      Riverina
      Date and time
      June 10, 2014, 10:26AM
    • A country girl and Ross, you're rather subdued in your attacks on Gillard's change. If this had been an Abbott change, I would have loved to see your responses....

      You can't just produce a bank statement and get the money back for a number of reasons (ie, identity fraud, money laundering provisions, etc).

      Commenter
      Nick
      Location
      Perth
      Date and time
      June 10, 2014, 10:52AM
    • Is this a mischievous article? Or, what is the actual point of the article?

      Seems as though you can get your money back (eventually).

      Commenter
      $keptic
      Location
      Melbourne
      Date and time
      June 10, 2014, 12:34PM
    • @ross of Malibar - Sorry Ross, but what right do they have to take my savings in the first place? Let alone, make me then jump through hoops to prove my ownership of said monies? This is FASCISM of the highest order, and I want the PM's head on a platter

      Commenter
      TommyP
      Date and time
      June 10, 2014, 12:43PM

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