• Unclaimed superannuation money protocol

    Purpose

    This information provides guidance to super providers in meeting their obligations under the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA) in relation to unclaimed superannuation money (USM) and the associated reporting obligations.

    This information:

    • provides technical guidance and does not replace the law
    • includes an explanation of various key terms contained in the law
    • gives guidelines on practical administration and our perspective of industry best practice
    • encourages consistent practices and application of the unclaimed super legislation across the super industry.

    This information does not have the force of law and is not binding. It was developed in collaboration with industry representatives to support compliance across the industry in meeting their obligations in relation to their member’s unclaimed super.

    When acting on the guidance provided in this information, you should take into account your member's individual circumstances and decide whether your action is appropriate.

    In line with your obligations under section 52(2) of the Superannuation Industry (Supervision) Act 1993, exercise your powers in the best interests of your members.

    This information does not apply to super providers that are trustees of a state or territory public sector super scheme, where:

    • the relevant state or territory has laws requiring the reporting and payment of USM to the state or territory government
    • the state or territory public sector super scheme complies with relevant state or territory laws.

    Where a state or territory does not have laws requiring the reporting of USM to the state or territory government, the state or territory public sector super scheme is required to comply with the SUMLMA and this information.

    See also:

    Guiding principles for industry best practice

    1. The best interests of the member should be of primary concern when applying the law and the guidelines within this information.
    2. Super providers should always make reasonable attempts to contact the member to advise them of their entitlement to a super benefit before reporting it as USM.
    3. Once the super provider has determined a member’s benefit is USM, they should report and pay it to the ATO on the next scheduled statement date.

    Category – USM general

    Legislative content

    The provisions outlining the USM regime are in Part 3 of the SUMLMA and the associated Superannuation (Unclaimed Money and Lost Members) Regulations 1999 (SUMLMR).

    The USM legislation sets out the process for dealing with USM held by regulated super funds and retirement savings accounts (RSAs).

    Part 3 of the SUMLMA requires a super provider to report to the Commissioner, by the scheduled statement day, details of amounts payable for each:

    • member who has reached eligibility age (generally 65 years old), where the trustee has lost contact with that member
    • non-member spouse who is entitled to a splittable payment, where the trustee cannot ensure payment to that person
    • member who has died, where the trustee cannot ensure payment to the people entitled to the money.

    If the amount is determined to be USM, it must be paid to the Commissioner.

    Once an amount is paid by a super provider to the Commissioner, that amount can be paid to the member if they apply for it to the Commissioner or on the Commissioner’s initiative. We have a responsibility to keep a register of USM, containing information received from super providers.

    As a general principle, super providers should attempt to contact the relevant person and advise them of their entitlement to a super benefit as soon as practical after:

    • a member has reached eligibility age (generally 65 years old)
    • a non-member spouse becomes entitled to a splittable payment
    • a member has died and another person is entitled to the money.

    Meaning of unclaimed money

    The law (members aged over 65 years old)

    Under section 12(1), an amount payable to a member of a fund (includes both accumulation and pension members)External Link is taken to be unclaimed money if all the following apply:

    1. the member has reached eligibility age
    2. the super provider has not received an amount in respect of the member (and, in the case of a defined benefits super scheme, no benefit has accrued in respect of the member) within the last two years
    3. after a five year period since the super provider last had contact with the member, the provider has been unable to contact the member again after making reasonable efforts.

    Eligibility age

    Under section 10(1) SUMLMA, eligibility age means:

    1. in the case of a man – 65 years old (or another age if prescribed by the regulations)
    2. in the case of a woman – 60 years old (or another age if prescribed by the regulations).

    However, for the purposes of USM we accept that eligibility age for both men and women is 65 years old under section 4A Eligibility age SUMLMR.

    Under section 10(2) SUMLMA, when determining whether a member of a fund has reached eligibility age:

    1. If the super provider does not know whether the member's gender – the member is taken to be a man
    2. If the super provider does not know the member’s date of birth – they may determine the member:    
      1. attained a particular age on a particular date(if the super provider reasonably believes that to be the case)
      2. turned 18 on the day they first became a member of the fund
      3. turned 18 on the day the super provider first received an amount in respect of him or her
      4. turned 18 at the start of their eligible service period.

    Best practice – ATO guidance

    Examples of 'received an amount' in respect of a member

    Whether a super provider has received an amount for a member depends on the type of payment.

    The following are examples of amounts considered as received in respect of members:

    • contributions, including    
      • eligible spouse contributions
      • employer contributions
      • member contributions
      • shortfall component as determined under the super guarantee legislation
      • payments to the fund from the super holding accounts (SHA) special account
      • government contributions.
    • benefits that were    
      • rolled over (paid as a super lump sum within the super system)
      • transferred (members' benefits paid out of, or received by, a regulated super fund or received from another regulated super fund otherwise than upon satisfaction by the member of a condition of release for all those benefits).

    The following examples are not considered as amounts received in respect of members:

    • investment earnings received by the super provider – as it is a return on a wide range of investments and does not relate to any specific member
    • distributions to accounts by super providers due to investment returns and profitability – because the earnings are received due to fund investments, not for the member
    • an involuntary super account transfer does not restart the clock – for example, if a member has reached eligibility age, has not been in contact with the fund for five years, and the fund has not received an amount in respect of the member within two years and their account is transferred to another fund (successor fund transfer), then their account should be paid to us as USM. The involuntary transfer is not deemed to be contact from the member.

    Meaning of ‘contact’

    Contact requires communication between two parties and can include:

    • a telephone conversation
    • meeting in person
    • member correspondence (written or electronic)
    • verification provided electronically via the super provider’s website – for example, verifying or updating address, membership or investment details,
    • if a super provider makes a pension payment to a member’s bank account and the payment is accepted by the bank – indicates the bank account is open and belongs to that member.

    Communication with an authorised third party/representative is also deemed contact. Examples of authorised third party include:

    • financial advisors/planners
    • solicitors
    • holders of powers of attorney.

    However, contact with third parties such as employers is not deemed as contact as they are not authorised to act on the member’s behalf.

    Examples of communication not deemed to be contact include:

    • leaving a message on a member’s mobile or voicemail which is never returned by the member
    • sending out an annual statement – where the super provider is unable to verify the member actually received the statement.

    By law, super providers must make a reasonable effort to contact a member after five years have passed since the last contact with the member – this should be done as soon as practicable after the end of the five-year period.

    However, it is prudent for super providers to attempt to contact their members more frequently.

    Super providers are required to maintain evidence of attempts to contact members. Super providers may decide the manner in which attempts to contact the member are recorded – however, the record should include sufficient details to establish the time, manner and outcome of the attempt.

    Penalties may apply for failing to make reasonable efforts to contact a member.

    The law (splittable payments)

    Under section 12(2), if the following conditions apply, the amount payable is taken to be unclaimed money:

    a) a payment split applies to a splittable payment in respect of an interest that a person has as a member of a fund

    b) as a result, the non-member spouse (or their legal personal representative if they have died) is entitled to be paid an amount

    c) after making reasonable efforts and after a reasonable period has passed, the super provider is unable to ensure the non-member spouse or their legal personal representative receives the amount.

    Best practice – ATO guidance

    Where a super interest is concerned, a payment split applies when either a:

    • splittable payment becomes payable and the non-member spouse is entitled to be paid an amount
    • splitting order applies.

    A splittable payment in respect of a super interest of a non-member spouse includes a payment to:

    • the spouse
    • another person for the benefit of the spouse
    • the legal personal representative of the spouse, after the death of the spouse
    • a reversionary beneficiary, after the death of the spouse
    • the legal personal representative of a reversionary beneficiary covered by the previous point, after the death of the reversionary beneficiary.

    The term 'unable to ensure' does not mean a super provider needs to be 100% certain the non-member spouse or their legal personal representative will receive the amount.

    As with any processes involving money transactions, there is no 100% guarantee that it is the non-member spouse or their legal personal representative who receives the amount. However, we expect that super providers already have processes and procedures with acceptable risk factors in place in relation to paying out benefits.

    The law (deceased members)

    Under section 14, an amount payable in respect of a member of a fund is taken to be unclaimed money if the following apply:

    1. the member has died
    2. the super provider determines that, under the governing rules of the fund or by operation of law, a benefit (other than a pension or annuity) is immediately payable in respect of the member
    3. the super provider has not received an amount in respect of the member (and, in the case of a defined benefits super scheme, no benefit has accrued in respect of the member) within the last two years
    4. after making reasonable efforts and after a reasonable period has passed, the super provider is unable to ensure the benefit is received by the person who is entitled to receive the benefit.

    Best practice – ATO guidance

    On being informed that a member has died, a super provider has an obligation to pay any resulting death benefits to the people entitled to them, in accordance with the governing rules of the provider and the law.

    In tracing those potentially entitled to the benefit after the member’s death, normal fund procedures should be followed.

    Whether some or all of the member's money becomes unclaimed depends upon the facts of each case.

    For example, if all of the persons entitled to the money have been identified, but some cannot be contacted despite reasonable efforts (or the provider is unable to ensure the benefit will be received by the identified individual), the entitlements of each of these people will be USM.

    However, the remainder of the deceased’s benefit can be paid to the other persons entitled to it.

    Concept of reasonable

    What is considered reasonable depends on the facts of each case and needs to be weighed with the costs and responsibilities of the trustees.

    Reasonable attempts/efforts

    The concept of reasonable is not defined in the SUMLMA or SMLMR, however these are some examples as part of our guidance:

    • telephoning the member, or the person who established the account, using the last known telephone numbers
    • writing to the member, or the person who established the account, asking for the necessary information
    • sending the member, or the person who established the account, an email asking for the necessary information
    • in the case of new applicants, contacting them upon finding information missing from their applications (for example, name, date of birth, address)
    • attempted contact using any details provided by the last known employer or intermediary – however, if the super provider has reason to believe the details were no longer valid (for example, the member has been reported as a lost member for the last ten years and there have been no changes in the members details), this would not be considered reasonable
    • the provider checking their own records to see if the member has other accounts with more current information
    • checking the telephone directory for more current details on the member
    • engaging a company like Australia Post to undertake database searches to provide more current details on the member
    • contacting the sponsoring employer (particularly where employer contributions are being made on a regular basis)
    • contacting any listed intermediaries
    • contacting the nominated beneficiaries listed on a binding death nomination.

    Example 1

    According to the super provider’s records, Jane Doe has just turned 65 years old and has an account balance of $1,000,000.

    No contributions have been received in the last three years and there has been no contact with the member for the last six years.

    The provider has sent annual statements to the member’s address and none of the mail was returned unclaimed.

    The provider telephones Jane Doe, but the call is unanswered.

    Given the size of the account balance, this action alone would not be considered a reasonable effort.

    However, it would be considered reasonable effort if the provider attempts to:

    • write to the member
    • contact the member’s employer
    • search the telephone directory for more recent contact details
    • check whether there are any other accounts for the member with different contact information.

    Example 2

    A member’s super account was transferred from a super provider to an eligible rollover fund (ERF).

    Information provided at the time of the transfer was limited to the member’s name, address, date of birth and benefit details.

    According to the information held by the ERF, the member has turned 65 years old, but no contributions or contact has been made within the last five years (since the member joined the ERF).

    The member's account balance is $3,750.

    The ERF previously had mail returned from the address provided at the time of the transfer.

    The ERF uses an electronic directory to locate another address for the member – however, mail is also returned from this address.

    Taking into account the factors listed above, this would be considered a reasonable effort by the ERF.

    Example 3

    A member rolled the money in his account from Super Provider A to Super Provider B five years ago.

    Two months after he rolled the money over, Super Provider A distributed money to all account holders and the member’s account received $1.25.

    It would normally be expected that Super Provider A would contact the member soon after the distribution to arrange a transfer out.

    However, in this case, Super Provider A did not do anything.

    The member is now 65 years old. Usually, the fund would be expected to attempt to contact the member using last known details.

    However, given the small balance, it would be reasonable to expect that any further action would be limited on the part of the super provider.

    End of example

    Meaning of a ‘reasonable period’

    Using current community standards in regards to correspondence is deemed acceptable. For example, allowing 28 days for a response for correspondence within Australia.

    It is an offence for a super provider not to make reasonable efforts to ensure that a benefit is received by either the non-member spouse or his or her legal personal representative – see Penalty for more information.

    In the case of the death of a member, determining a ‘reasonable period’ may require consideration of:

    • the period of time since the fund last had contact with the member, especially since the last time that beneficiary details were updated (refer to the paragraph below for the meaning of ‘last had contact’)
    • whether or not a trust estate is involved
    • the likelihood of finding entitled persons such as dependants
    • whether any potential beneficiaries may be overseas
    • whether the super provider has knowledge of recent family circumstances.

    Meaning of ‘last had contact’ for the purposes of USM

    ‘Last had contact’ means communication between a super provider and a member, where there is some action on the part of the member establishing they received the communication.

    If it has been five years or more since the super provider had an interaction with the member, and the other requirements of the definition of USM have been met, the super provider must attempt to establish contact with the member again.

    Where they are unable to establish contact, the member’s account is to be paid to us as USM.

    Find out more:

    USM of former temporary residents

    The super benefit of a former resident becomes unclaimed because the person has departed Australia, but has not claimed their benefit from their super provider within a specified period of time.

    The law

    Under section 20C(1), the Commissioner must give a super provider for a fund a written notice if the Commissioner is satisfied:

    1. there are reasonable grounds for believing the person has a super interest in the fund
    2. the person is a former temporary resident.

    Former temporary resident is defined in section 20AA(1) as:

    1. the person    
      1. held a temporary visa (except a visa prescribed in the regulations – currently subclass 405 (Investor Retirement) and subclass 410 (Retirement) visas per Regulation 4B of the Superannuation (Unclaimed Money and Lost Members) Regulations 1999) that has ceased to be in effect
      2. left Australia after starting to hold the visa (independent of whether their visa ceased to have effect before, when or after they left Australia)

    Reporting

    When a super provider receives a section 20C notice from the Commissioner identifying their member as a former temporary resident, they are required to give a statement to the Commissioner (using the approved form) by the next scheduled statement day.

    Due date for statements, as well as payment where required, are 31 October and 30 April each year.

    Example 1

    A super provider receives a section 20C notice from the Commissioner in respect of one of their members on 15 May 2010.

    The super provider must provide the Commissioner with the required information in the approved form and payment (if required) by 31 October 2010 – the next scheduled statement day.

    End of example

    However, if it is less than 28 days to the next scheduled statement day when the Commissioner gives the section 20C notice to the super provider, the super provider has until the following schedule statement day to provide the required information and payment.

    Example 2

    A super provider receives a section 20C notice from the Commissioner in respect of one of their members on 10 October 2010.

    This is within 28 days of the next scheduled statement day (31 October 2010), so the super provider has until 30 April 2011 (the following scheduled statement day), to provide the required information and payment.

    End of example

    Super providers are required to give the Commissioner a statement even where:

    • the person for whom the Commissioner has given the section 20C notice does not have a super interest in the fund
    • the super provider is not required to pay an amount in respect of the person to the Commissioner.

    The Commissioner may defer the time for giving the statement, however the request for deferral must be in writing, clearly state the reasons for delay and include a proposal for an alternate date for lodging the information. The deferral, if granted by the Commissioner, will be in writing.

    Failing to lodge information by the schedule statement day and not obtaining a deferral from the Commissioner may result in a Penalty.

    Payment

    A super provider is responsible for paying super money (generally as a departing Australia super payment) to a former temporary resident if requested, unless the money has already been paid to the Commissioner. From that time, responsibility of payment to former temporary residents of their super interests rests with the Commissioner.

    Payment of super money of former temporary residents to the Commissioner is due and payable at the same time the statement is due to be lodged.

    As with lodgment, an application may be made to the Commissioner to defer payment. Such requests must be made in writing, outlining the reasons for the deferral and proposing an alternative date for payment.

    As well as giving a statement to the Commissioner, the super provider must also calculate and pay the identified member’s super interest where required. To do this, the super provider must calculate the amount to be paid and determine when the calculation will be done.

    Timing of the calculation

    Super providers must calculate the member’s super interest immediately before they pay the amount to the Commissioner.

    The ‘calculation’ time will be one of the following:

    • immediately before the next scheduled statement day after the section 20C notice was given
    • if it is less than 28 days to the next scheduled statement day when the Commissioner gives the section 20C notice to the super fund, immediately before the following scheduled statement day
    • if the Commissioner has deferred or granted an extension for the super provider to make a payment, immediately before the deferred due date
    • if the super provider pays or lodges before the next schedule statement day, then immediately before the super provider pays or lodges the approved form
    • if the super provider makes multiple payments or lodgments before the next scheduled statement day, immediately before the payment or lodgment for the identified member included in that particular payment or lodgment.

    Example 1

    A super provider receives a section 20C notice from the Commissioner in respect of one of their members on 10 October 2010.

    As this is within 28 days of the next scheduled statement day (31 October 2010), the super provider has until 30 April 2011 to provide the required information and make a payment.

    The super provider is required to calculate the member’s interest immediately before payment to the Commissioner, which is due on or before 30 April 2011.

    Example 2

    The circumstances are the same as the above example – however, the super provider decides to lodge its report early on 1 February 2011.

    As a result, the super provider is required to calculate the member’s interest immediately before 1 February 2011

    Example 3

    A super provider receives a section 20C notice in respect of 400 members in May 2010. They must report and pay (where applicable) by the next scheduled statement day – 31 October 2010.

    Due to the time required to calculate the members’ benefits, they decide to process them over a period of time. The super provider lodges a statement and makes a payment in June 2010, July 2010, August 2010 and September 2010 (100 members per statement).

    The super provider is required to calculate the member’s interest before the payment or lodgment of the statement on which the member is included.

    End of example

    How to calculate former temporary resident’s super interest

    Once a super provider determines the time the former temporary resident’s interest should be calculated, they should apply the following formula at that time:

    Starting amount – amount to be paid to member excess amount (payable to the Commissioner)

    The starting amount is the notional amount that would have been paid to the member at the calculation time if they could and had requested payment.

    The starting amount:

    • does not include any previous payments to the member
    • includes any interest or earnings which would normally be included
    • is reduced by any fees or charges that would have been incurred if the member had asked for payment
    • is reduced by any reduction to give effect to a payment split under Part VIIIB of the Family Law Act 1975.

    However, when working out the starting amount, the super provider must not notionally withhold the DASP tax that would otherwise apply.

    Example 1

    A super provider has received a section 20C notice in respect of one of its members, Maria.

    The super provider has calculated the balance of Maria’s interest at the calculation time is $18,955.00, to which $47 earnings is added.

    Normally, if Maria had asked for this to be paid out as a super lump sum, she would be charged an administration fee of $25. Her starting amount is:

    $18,955 + $47 – $25 = $18,977

    End of example

    Amounts to be paid to the member need to be determined to reduce the starting amount:

    • if the member has met a condition of release and requested an amount be paid to them, the starting amount is to be reduced by the amount to be paid
    • if the member has died, the starting amount is reduced by the amount that has been, or is required to be, paid because of the member’s death to an entitled beneficiary
    • the starting amount is reduced by the amount that supports a super income stream
    • an amount (if any) worked out under the Regulations.

    Example 2

    As calculated above, Maria’s starting amount is $18,977 – however she applied to the fund for a departing Australia superannuation payment of $18,977.

    The excess amount to be paid to the Commissioner is then worked out as:

    $18,977 (starting amount) – $18,977 (amounts to be paid to member) = $0.00

    As there is no excess amount, no payment is required to be paid to the Commissioner as USM of a former temporary resident – however, a statement must still be lodged.

    Example 3

    A super provider has received a section 20C notice in respect of one of its members, Joshua.

    The super provider calculates the balance of Joshua‘s interest at the calculation time is $300,000.

    However, prior to leaving Australia, Joshua met the permanent incapacity condition of release and subsequently started an account-based income stream.

    The amount that supports Joshua’s income stream is $150,000 – as a result, the excess amount to be paid to the Commissioner is worked out as:

    $300,000 (starting amount) – $150,000 (amounts to be paid to member) = $150,000.

    End of example

    The super provider must not withhold any tax from the amount paid to the Commissioner.

    Correcting errors

    Revoking a notice

    A section 20C notice must be revoked by the Commissioner where:

    • the section 20C notice should never have been given in respect of a person (because the circumstances for the giving of the notice never existed in the first place)
    • the circumstances relating to the person have changed since the time the section 20C notice was given (the circumstances for giving the notice no longer exist).

    For example, the:

    • super provider never held a super interest for the person
    • person never held a temporary visa
    • person held a temporary visa, but has not left Australia
    • person is an Australian or New Zealand citizen
    • person is the holder of a current temporary or permanent visa, or has applied for a permanent visa
    • person held a visa prescribed by the Regulations (Regulation 4B of the SUMLMR currently prescribe subclass 405 (Investor Retirement) and subclass 410 (Retirement) visas).

    If a super provider receives a section 20C notice for a member they believe should not have been given a notice, or where they know the member's circumstances have changed, they can request in writing (and include any relevant documentation) that the Commissioner revoke the notice.

    It is not expected that a super provider should undertake extensive tests to verify whether a section 20C notice should have been issued, particularly where some of this information (such as citizenship) would not generally be available to the provider.

    However, if a super provider is in contact with the member and such information comes to light, or the provider’s records show the account is still receiving contributions, the ATO will work with the provider to determine whether a section 20C notice should have been issued.

    The Commissioner is required to revoke a section 20C notice if satisfied that:

    • there were no, or there is no longer, reasonable grounds for believing the person has a super interest in the fund
    • the person never met, or no longer meets, the definition of former temporary resident.

    To do this, the Commissioner will issue a written revocation notice (under section 20J of the SUMLMA) that revokes the original section 20C notice.

    Once the original section 20C notice is revoked, it is taken to have never been given – as a result, the super provider no longer has any requirement to provide a statement or pay an amount in respect of the person to the Commissioner.

    However, a revocation notice will have no effect (will not revoke the original section 20C notice) if:

    • before the Commissioner revokes the original section 20C notice, the super provider made a payment to the Commissioner because of the original notice
    • the notice of revocation is given to the super provider less than 28 days before the provider is required to give a statement to the Commissioner (including deferred dates) and before the end of that day the super provider gives a statement and/or makes payment (where required) because of the original section 20C notice.

    This second condition exists to allow super providers who have already started the process of responding to the Commissioner’s original section 20C notice to ignore the revocation notice and continue with their processing.

    Where it is apparent that a revocation will have no effect (because the super provider has given a statement or made a payment) the Commissioner is not required to revoke the original section 20C notice.

    Example 1

    A super provider receives a section 20C notice in respect of one of its members on 15 September 2011, advising that they are a former temporary resident.

    However, the super provider is aware the member has not left Australia and continues to receive both employer and personal contributions on a monthly basis.

    The super provider writes to the ATO on 20 September 2011 requesting the notice be revoked.

    On 15 October 2011, the super fund receives the revocation notice. As this is within 28 days of the scheduled statement day (31 October 2011,) if the super provider has already started the process to report and pay an amount because of the original section 20C notice (and the provider does lodge and pay by the due date of 31 October 2011), the revocation will have no effect.

    However, if the super provider has not started the process to report and pay, or chooses to remove the member from the statement being prepared – the original section 20C notice is revoked and the super provider is no longer required to provide the Commissioner with a statement or make payment (in respect of this person) on the scheduled statement day – 31 October 2011.

    Example 2

    A super provider receives a section 20C notice in respect of one of its members on 15 September 2011, advising they are a former temporary resident.

    The super provider lodges a statement (and makes a payment) by the next scheduled statement day.

    However, the super provider becomes aware that the member has dual citizenship with Britain and New Zealand.

    They write to the ATO requesting the notice be revoked, because the member is a New Zealand citizen. At this point, the provider has already lodged a statement and made a payment in respect of the member, so any revocation would have no effect.

    As a result, the Commissioner is not required to revoke the notice.

    The provider may still seek refund of the overpayment, provided there is no request from the member in question for the Commissioner to direct the amount elsewhere (for example, a direction to pay the amount to the member or to another super provider).

    End of example

    Requesting a refund of an overpayment

    Where a super provider has paid an amount because of a notice given by the Commissioner under section 20C of the SUMLMA – but the amount should not have been paid, or the amount paid was greater than it should have been, the Commissioner is required to refund that amount to the super provider.

    Examples of where an overpayment may occur include:

    • an error was made in the calculation of the member’s interest and too much was paid to the Commissioner
    • due to an error, an incorrect person’s interest (that is, the interest of a person who was not identified in the section 20C notice) was paid to the Commissioner
    • the person’s interest was paid to the Commissioner, but it is later determined that the person does not meet the definition of a former temporary resident, where the person has not approached the ATO directly for payment.

    If the super provider becomes aware of an overpayment to the Commissioner because the super provider later forms the belief that the section 20C notice was incorrect, the super provider should email supercrt@ato.gov.au with the following information:

    • your provider name
    • your provider Australian business number (ABN)
    • Temporary Resident Notification Number
    • member’s name
    • member’s date of birth
    • details about why the section 20C notice may have been incorrect (for example, dates of recent contributions).

    We will assist the super provider by confirming whether the section 20C notice was incorrect.

    Alternatively, the member may approach us directly to request a payment or rollover of the benefit.

    Where the section 20C notice was incorrect, or where the super provider made a calculation error, the super provider must lodge an USM statement with the member’s details and a member status of E – Error.

    Where a section 20C notice was incorrect, the amount reported should be nil.

    Where an error was made in calculation, the correct amount should be reported.

    This will trigger a refund of the overpayment from us to the super provider.

    Lost member accounts for USM

    Meaning of 'lost member account'

    Under section 22, a member of a fund is a lost member at a particular time if the member is, at that time either a:

    1. lost RSA holder within the meaning of regulation 1.06 of the Retirement Savings Accounts Regulations 1997 (RSA Regulations)
    2. lost member within the meaning of regulation 1.03A of the Superannuation Industry (Supervision) Regulations (SIS Regulations).

    The SIS Regulations define a member of a super provider to be a lost member at a particular time if any of the following apply:

    • the member is uncontactable
    • the member is an inactive member
    • the member joined the fund from another super provider as a lost member, unless either    
      • within the last two years of the member's membership, the super provider verified the member's address is correct and has no reason to believe the address is now incorrect
      • the member is permanently excluded from being a lost member because either    
        • the member is an inactive member who indicated by a positive act they wish to continue to be a member of the fund
        • the member contacted the super provider at any time after they joined the fund and indicated they wished to continue being a member of the fund
        • the member is a member of a self-managed super fund (SMSF).

    A key underlying concept is that it is the member that is lost – not the account.

    See also:

    General principles

    The provisions governing the payment to the Commissioner of certain accounts relating to lost members are contained within Part 4A of the SUMLMA.

    If a super provider has accounts that meet the definition of a lost member account (balance of small accounts and inactive accounts of unidentifiable members) at the end of an unclaimed money day, the super provider must provide the Commissioner with a statement and make a payment (where applicable) by the corresponding scheduled statement day.

    Upon receipt of an application by a person the lost member account belongs to, or on the Commissioner’s own initiative, the Commissioner must pay the money either to:

    • a complying super fund
    • that person
    • one or more of that person's beneficiaries or the legal personal representative (in the event of their death).

    Categories of USM lost member accounts

    Super providers must report and pay to the Commissioner amounts that meet the following definitions of 'lost member accounts'.

    Test 1 – small lost member account

    Under section 24B(1), an account in a fund is taken to be a lost member account if all the following apply:

    1. the member on whose behalf the account is held is a lost member
    2. the balance of the account (on the unclaimed money day) is less than $6,000
    3. the account does not support or relate to a defined benefit interest (within the meaning of section 292-175 of the Income Tax Assessment Act 1997).

    Test 2 – inactive account of an unidentifiable member (insoluble lost member account)

    Under section 24B(2), an account in a fund is also taken to be a lost member account if all the following apply:

    1. the member on whose behalf the account is held is a lost member
    2. the super provider has not received an amount in respect of the member within the last 12 months
    3. the super provider is satisfied it will not be possible them, considering the information reasonably available to them, to pay an amount to the member
    4. the account does not support or relate to a defined benefit interest (within the meaning of section 292-175 of the Income Tax Assessment Act 1997).

    Lost member account test 1

    At the end of an unclaimed money day, a super provider must identify any accounts that belong to lost members (as defined by the relevant regulations) where the balance is less than $6,000.

    The balance at this time should not reflect any amounts yet to be credited or debited from the account – the super provider is not required to add interest or deduct fees to determine whether the account is a lost member account.

    Accounts below $6,000 that belong to lost members, which do not support or relate to a defined benefit interest, will meet lost member account test 1.

    The super provider must provide information relating to the account to the Commissioner on the scheduled statement day.

    Example – balance over $6,000 on scheduled statement day

    A super provider identifies a member that meets the definition of 'lost member' has an account balance of $5,999 on the unclaimed money day, 31 December – as such, it is a lost member account.

    Before the corresponding scheduled statement day, 30 April, the superannuation account is credited with interest of $3.50, bringing the account balance to $6,002.50.

    However, as the value of the account was below $6,000 on the unclaimed money day, the account must still be reported and paid to us.

    Example – balance under $6,000 on scheduled statement day

    A super provider identifies a member that meets the definition of 'lost' has an account balance of $6,010 on the unclaimed money day, 31 December.

    Although the member remains a 'lost member', the account does not meet the definition of a small lost member account.

    Before the corresponding scheduled statement day (30 April), the account is debited with charges of $13.50, bringing the account balance to $5,996.50.

    However, as the value of the account was over $6,000 on the unclaimed money day, the account is not required to be reported or paid.

    If the account value remains under $6,000 at the next unclaimed money day (31 October), then it may meet the definition of a small lost member account.

    End of example

     

    Example – account under $6,000 and member is inactive

    Poppy has $5,400 in her super account with a fund that has her correct contact information.

    She joined the fund as a standard employer-sponsored member seven years ago. She has not received any contributions or rollovers to her account for the last five years.

    Poppy is a lost inactive member with a small balance, so the fund must report and pay the balance to us on the next reporting date as a small lost member account.

    Example – member with multiple accounts on scheduled statement day

    Simon is a lost member and has two lost super accounts with the same fund – account 1 has a balance of $5,500 and account 2 has $6,800.

    Although the combined value of both accounts is over $6,000, the super provider is required to report and pay account 1 as a lost member account to us, as the value of that account was below $6,000 on the unclaimed money day.

    The fund must report and pay the amount to us on the next reporting date as a small lost member account.

    Example – account under $6,000 and member is uncontactable

    Jack has a super account with a small balance of $1,900.

    The fund has an address for him and has had two separate pieces of mail returned unclaimed.

    The fund has not received a contribution for Jack in the last 16 months and he has not engaged with the fund.

    Jack is a lost member because he is uncontactable and has not had a contribution or rollover within 12 months.

    On the next USM scheduled statement date, the fund must report and pay the balance to us as a small lost member account.

    End of example

    Lost member account test 2

    At the end of an unclaimed money day, a super provider must identify any accounts belonging to lost members (as defined by the relevant regulations), and where the super provider has not received an amount in respect of the member within the last 12 months. For example:

    • contributions, such as employer or personal contributions)
    • rollovers
    • transfers.

    These amounts do not include interest or earnings that may be credited to the account by the super provider.

    Example

    A super provider holds an account for a lost member at 30 June 2012.

    The last employer contribution credited to the account was on 15 March 2011.

    No personal contributions, rollover or transfers were ever received.

    The super provider also credited earnings every six months.

    For the purposes of test 2, the super provider has not received an amount in respect of the member within the last 12 months.

    End of example

    The condition relating to the member’s unidentified status is that the super provider must be satisfied that, considering the information reasonably available to them, they would be unable to pay an amount to the member at any time in the future. That is, at the time the test is applied, and based on the information the super provider holds, if a person attempted to claim ownership, the super provider could not be confident of verifying ownership.

    Although the SUMLMA states the decision is to be made on any information reasonably available to the super provider, it is expected a super provider will, if they have not already done so, follow up any information that could be made available to them at this time.

    This allows the super provider to make a reasonable assessment of whether the amount will meet the definition of an insoluble lost member account.

    For example, if an amount would potentially meet the definition of an insoluble lost member account, but the super provider believes it may be able to obtain further identity information about the member from the employer who contributed on their behalf, it would be expected the super provider contact (or attempt to contact) the employer.

    In this situation, it is expected the super provider contact the employer to gain any additional information.

    The decision as to whether they meet the insoluble lost member account test is to be made on information reasonably available at that time – not on information that may become available in the future.

    The term reasonable is not defined within the SUMLMA and must be determined in the context of the information held by the super provider in a particular circumstance.

    However, as a general guide, the super provider must hold a minimum of two complete pieces of quality information about the member to enable them to determine and verify the identity of the person whose account they hold.

    Example

    An account was opened with the super provider for John Smith in June 2002. No further information was provided, and contributions ceased in July 2004.

    No records exist to specify who made the contributions. Attempts by the super provider to locate the member were unsuccessful.

    As the super provider has only one piece of complete information, it determines this would not be sufficient for them to establish the member’s ownership of the account, even if the member were to approach the super provider.

    The account is identified as an insoluble lost member account for the purposes of the lost member account provisions.

    Example

    Joseph is a lost member and has a super account has a balance of $7,500.

    No contributions or rollovers have been received within the last twelve months. Joseph’s super fund does not have his date of birth, TFN or details of his employer.

    Based on this lack of information about Joseph, the fund does not think it will ever be possible to pay him.

    The fund must report and pay the balance to us on the next reporting date as an insoluble lost member account.

    End of example

    Even where the super provider holds two (or more) complete pieces of information, super providers should still assess this information in terms of quality and whether it would truly allow them to correctly establish the identity of the account’s owner.

    Example

    A super provider holds an account belonging to a lost member, John Brown.

    No contributions or rollovers have been received for over 12 months.

    The super provider has the member’s name and date of birth – however, on reviewing this information, the date of birth is recorded as 1 January 1900.

    As this date of birth is clearly not correct and the only other piece of information the super provider holds is the member’s name, which is a relatively common name, this would generally not be sufficient for the super fund to establish the member’s ownership of the account.

    Example

    A super provider holds an account belonging to a lost member, Homer Simpson.

    No contributions or rollovers have been received for over 12 months.

    The super provider has the following information:

    Name: Homer Jay Simpson

    Address: 742 Evergreen Terrace, Springfield

    Employer: Springfield Nuclear Power plant

    Though the super provider has three pieces of information, the quality of this information, in terms of identifying the member, may not be sufficient as it mimics details from a popular television program.

    The super provider does not believe the information will assist them in paying the account to the person to whom it belongs – instead, they pay it to us as an insoluble lost member account.

    End of example

    Ultimately, the decision about whether a super provider holds sufficient information to determine the account ownership is up to each individual super provider.

    However, to give some guidance and to assist with consistency, the following examples provide some general ideas about the level of information that would not be considered reasonable to establish an account's ownership.

    Examples where information would generally not be sufficient to establish account ownership:

    • John Smith – only one piece of information
    • Julie, 15 June 1964 – two pieces of information, but one is incomplete
    • David Black, contributions made by Coles – two pieces of information, but one is incomplete – due to the size of the employer this may not be enough to establish ownership
    • Judy McDonald, Whoop Whoop Road, Outback – two pieces of information, but due to the vagueness of the address this may not be enough to establish ownership.

    Unlike the USM provisions, the lost member accounts provisions do not impose any additional obligation to contact or locate the member at the time of applying the tests.

    However, this does not absolve the super provider from their general fiduciary duty or trustee responsibilities in attempting to locate the member and gaining additional information throughout the time they are the holder of the account – particularly where this may prevent the member from becoming a ‘lost member’.

    How to report a member who meets the definition of more than one type of USM

    A member may satisfy the definition of more than one type of USM – however, the SUMLMA legislation clearly defines which type of unclaimed super an account must be used in reporting to us.

    The order of precedence is:

    1. non-member spouse or deceased member
    2. member who is a former temporary resident identified on a section 20C notice
    3. member who has reached eligibility age
    4. small or insoluble lost member account.

    Example

    • Where a member is a former temporary resident for whom you received a section 20C notice, and that member also satisfies the definition of a deceased member – you should report the member as having unclaimed super as a deceased member. A deceased member takes precedence over a former temporary resident.
    • Where a member is a former temporary resident for whom you received a section 20C notice, and also satisfies the definition of a member who has reached eligibility age – you should report the member as having unclaimed super as a former temporary resident – this category takes precedence over a member who has reached eligibility age.
    • Where a member meets the definition of a lost member account and the member has also reached eligibility age, you should report the member as having unclaimed super – member who has reached eligibility age. All other types of unclaimed super take priority over the lost member account definition.
    End of example

    Amount to be paid

    If an account is identified as a lost member account on an unclaimed money day, the super provider is required to make the payment of the account to the Commissioner by the corresponding scheduled statement day where both the following apply:

    • the account is still held by the super provider on behalf of the person
    • the person is still a lost member at the earlier of (the calculation time)    
      • the time payment is made (if an amount is payable)
      • the time the payment is due and payable.

    Where a lost member account was identified on an unclaimed money day, but due to a change in the member’s circumstances no payment was required, super providers must still lodge a statement, including details of the lost member account.

    Example

    A super provider identifies that a member that meets the definition of a lost member has an account balance of $1,750 on the unclaimed money day (31 December). As such, it is a lost member account.

    Before the corresponding scheduled statement day (30 April), the super provider receives a request from the member to transfer the account to another super provider.

    As the account was a lost member account on the unclaimed money day, the super provider is still required to lodge a statement reporting that the member is no longer lost (member status G).

    However, because they no longer hold the money in respect of the account of the person, no payment is required.

    End of example

    Where the balance of a lost member account is under $6,000 on an unclaimed money day, but exceeds $6,000 by the scheduled statement day due to interest or earnings, super providers must still report the member as an USM small lost member account, and pay the amount to us, providing the member is still considered a lost member.

    Example

    A super provider identifies a member that meets the definition of lost member has an account balance of $5,999 on the unclaimed money day (31 December) – as such, it is a lost member account.

    Before the corresponding scheduled statement day (30 April), the super account is credited with interest of $3.50, bringing the account balance to $6,002.50.

    However, because the value of the account was below $6,000 on the unclaimed money day, the account must be reported and paid to us.

    End of example

    If the member was a lost member on the unclaimed money day, but the balance of the account at the calculation time is nil or below nil, it needs to be reported.

    Example

    On the unclaimed money day (31 December 2012), a super provider identifies that a lost member’s balance is $25 – as such, it is a lost member account.

    At the calculation time, the member was still a lost member and the account was still held by the super provider – no earnings had been credited to the account, and the super provider normally charges an exit fee of $30.

    The amount payable is $25 – $30 = –$5.

    On the unclaimed money day you are holding $25, but on the scheduled statement day the account balance is less than $0.

    You must report using status G and report the amount of money held on the unclaimed money day ($25).

    You have no obligation to pay this money, as the balance on the schedule statement day is less than $0.

    End of example

    Payment of lost member accounts subject to Family Law payment splits

    If a lost member account that must be paid to the Commissioner is subject to a payment split in which the non-member spouse is, or could be entitled to be, paid an amount, then the amount paid to the Commissioner is worked out as follows:

    • work out the member's account balance at the payment date
    • for the lost member, only take into account their entitlement to payment after any reduction by the payment split (disregarding subsection 90MB(3) of the Family Law Act 1975)
    • for the lost member, work out the amount that would normally be rolled over or transferred if this had been requested by the member (as set out above).

    Example

    An account has been identified as a lost member account, as it meets the inactive account of an unidentifiable member test.

    On the unclaimed money day, the balance of the account was $9,705.

    At the calculation time, the member was still a lost member and the account was still held by the super provider.

    Additionally, $95 in earnings had been credited to the account and the super provider normally charges an exit fee of 2% of the balance.

    However, despite minimal information being recorded against the account, the super provider is aware that it is subject to a 50/50 Family Law payment split.

    The amount payable to the Commissioner would be:

    (($9,705 + $95) / 2) – $98 (2% of lost member's payable balance) = $4,802.

    End of example

    The super provider is also required to pay to the Commissioner the non-member spouse’s entitlement after giving effect to the payment split – this is payable to the Commissioner at the same time as the payment of the lost member account.

    The super provider must also include details of the non-member spouse (and the payment made in respect of them) in the statement to the Commissioner.

    Example

    Following on from the above example, the non-member spouse’s entitlement after the payment split has been applied is $4,900.

    The exit benefit for this member would be the account balance minus the 2% exit fee – a total of $4,802 ($4,900 – $98).

    The super provider is required to report and pay this amount to the Commissioner at the same time they report and pay in regards to the lost member account.

    End of example

    What happens if a lost member account is transferred to an eligible rollover fund (ERF)?

    Reporting

    • If a lost member account is transferred to an ERF prior to an unclaimed money day, because the super provider was not the holder of that account on the unclaimed money day, there is no requirement to provide a statement in relation to it.
    • If the super provider holds the lost member account on the unclaimed money day, and the account is transferred to an ERF between the unclaimed money day and the scheduled statement day, the super provider must provide a statement in relation to the account.

    When lodging, a super provider can use the member status N – no longer unclaimed.

    For lost member accounts, this indicates to us that the super provider ceased to be the holder of the account, or the member ceased to be lost between the unclaimed money day and the day the report is lodged.

    Paying

    • If the super provider holds the lost member account on the unclaimed money day, and the account is then transferred to an ERF before the scheduled statement day, no payment is required.
    • As the member remains a lost member (see paragraph 1.03A(1)(c) of the SISR) upon transfer to the ERF, the ERF may need to report and pay the lost member account – if the member has not been found and the ERF is the holder of the account on the next unclaimed money day.

    Scenarios

    When is a member’s money unclaimed?

    Scenario one

    A member commences a market-linked super income stream.

    As the account is subject to a splitting order, the non-member spouse is entitled to an income stream payment.

    The non-member spouse has lost touch with the provider and no new contact details have been found despite extensive efforts to trace them.

    The non-member spouse’s money is unclaimed

    Although the member’s account is active, the money belonging to the non-member spouse is USM – because, after making a reasonable effort, the super provider is unable to ensure the non-member spouse receives their entitlement.

    Scenario two

    A super provider receives confirmation a member has died.

    The super provider determines a benefit is immediately payable in respect of the member.

    There have been no amounts received for over two years. Over a reasonable period of time, the super provider makes extensive efforts to identify and contact potential beneficiaries.

    The super provider determines there are three beneficiaries entitled to claim a death benefit, but can only locate one of them. Beneficiary A is paid their entitlement. Beneficiaries B and C cannot be located.

    Beneficiary B's and Beneficiary C’s money is unclaimed

    If the super provider is unable to locate or contact the other two beneficiaries, their share of the money becomes USM.

    Scenario three

    In reviewing a member’s account, a super provider determines:

    • the member has reached 65 years old
    • they have an address for the member and have had no mail returned unclaimed
    • the member set up the account themselves, and it only received personal contributions and a rollover (these were not employer sponsored)
    • the provider has not received any amounts or had any contact from the member for over five years
    • they are unable to contact the member after making reasonable attempts.

    The member’s money is unclaimed

    As the provider is unable to contact the member after making reasonable efforts, the account becomes USM. The super provider is required to report and, generally, pay the member’s account balance to the Commissioner.

    When is a member’s money not unclaimed?

    Scenario one

    A member has been with a provider for over 20 years and turns 65 years old.

    Contributions ceased over five years ago and it has been established that the member is no longer employed.

    The member phoned the provider and updated their address details two years ago.

    The member’s money is not unclaimed

    Although the member is over 65 years old and there has been no activity on their account for over two years, it has been less than five years since the member last had contact with the fund.

    Scenario two

    A super provider receives notification that a member has died.

    A contribution was received from the member’s employer shortly before the member’s date of death.

    Over a period of 18 months since the death of the member, the provider makes extensive efforts to identify and contact potential beneficiaries. The provider’s efforts have been unsuccessful.

    The member’s money is not unclaimed

    Although the member is deceased and the provider has made reasonable efforts over a reasonable period to identify and contact the persons entitled, the money is not unclaimed as it has been less than two years since a contribution was made to the member’s account.

    Scenario three

    A super provider receives notification that a member has died.

    The super provider determines that a benefit is immediately payable in respect of the member.

    There have been no amounts received for over two years. Over a reasonable period of time, the super provider makes extensive efforts to identify and contact potential beneficiaries.

    The super provider determines there are three beneficiaries entitled to claim a death benefit, but can only locate one of them. Beneficiary A is paid their entitlement. Beneficiaries B and C cannot be located.

    Beneficiary A’s money is not unclaimed

    As the super provider has satisfied themselves of Beneficiary A’s entitlement, their determined share of the money can be paid to them as a death benefit.

    Member accounts in pension phase

    The SUMLMA applies to all member accounts, regardless of whether these accounts are in accumulation or pension phase.

    Scenario one

    A member is 65 years old and has an account in pension phase.

    The pension payments are returned (as an un-presented cheque or returned EFTs) and the fund is unable to contact the member to obtain new payment details.

    After five years have passed and further reasonable attempts have been made by the fund to re-establish contact with the member, the fund is still unable to contact the member.

    The member’s money is unclaimed.

    Scenario two

    A member of a super fund has an account in pension phase and a family law payment split applies to a payment from this account.

    The fund is unable to contact the non-member spouse.

    After a reasonable period of time has passed and after further reasonable attempts to contact the non-member spouse, the fund is unable to ensure that the non-member spouse receives the amount they are entitled to.

    The member’s money is unclaimed.

    Scenario three

    A member of a super fund has an account in pension phase and the fund is notified of the member’s death.

    After making reasonable efforts, and after a reasonable period of time has passed, the fund is unable to establish contact with beneficiaries entitled to receive the benefit. The fund is unable to ensure these beneficiaries receive the benefit they are entitled to.

    The member’s money is unclaimed.

    Regulation 6.21 of the SIS Regulations 1994 requires a member’s benefits in a regulated fund to be cashed as soon as practicable after the member dies.

    If a lump sum benefit becomes payable as a result of the member’s death, this means paragraph 14(b) of SUMLMA is satisfied.

    Scenario four

    A member of a super fund has an account in pension phase, which commenced more than 12 months ago and has a current balance of $3,000.

    Pension payments are returned (as an un-presented cheque or returned EFT).

    The member has not made any contact or act of engagement within the last year and the fund is unable to contact the member to obtain new contact details and/or payment details.

    The member’s money is unclaimed.

    This is a small lost account, as they satisfy the criteria in section 24B of SUMLMA.

    Scenario five

    A member of a super fund is more than 65 years old and has an account in pension phase. They request the entire balance be paid to them as a lump sum benefit.

    The fund determines the member has already received the minimum required income payments for the financial year and processes the member’s request for a lump sum benefit payment.

    The lump sum benefit payment is returned (as an un-presented cheque or returned EFT), and the fund is unable to contact the former member to obtain new contact details and/or payment details.

    The member’s money is unclaimed – if subsections 12(1)(c) and (d) of the SUMLMA have been satisfied.

    Also, the member’s benefit could be considered a small lost account under section 24B, using the new lost definition that applies from 1 July 2016 – if they have not contacted the fund in the last 12 months pursuant to 1.03A(1)(a)(ia) of the SIS Regulations.

    Scenario six

    A lump sum payment was paid out of a member’s or former member’s super account, which met one or more condition of release (for example, hardship payment).

    The payment is not cashed (for example, in the case of an un-presented cheque or wrong bank account provided by the former member or member).

    The member’s money is unclaimed – if relevant SUMLMA sections have been satisfied.

    The fund may need to wait 12 months before meeting the lost uncontactable test, but lost inactive may still apply.

    Any complaints regarding the trustee’s original decision will be subject to normal dispute processes within the fund, and potentially can be taken to the Superannuation Complaints Tribunal (SCT). These cannot be dealt with by us.

      Last modified: 27 Jul 2017QC 45233