• CRT Alert 006/2016

    Unclaimed Superannuation Money (USM) lodgement meeting

    On Monday, 15 February 2016, a meeting was held between representatives of the ATO and the Super Funds Advisory Group (SASG) to discuss emerging industry concerns about changes to lost member and unclaimed superannuation monies law.

    The overarching impetus of the discussion was the increased USM threshold from $2000 to $4000, which will impact upcoming unclaimed superannuation money (USM) reporting and payment obligations due by 30 April 2016 for the period ending 31 December 2015.

    Since the amending legislation received royal assent in October, we understand that funds have renewed their efforts to engage with members likely to be impacted. This recent concern has emerged as funds have started preparing for their USM lodgement due in April 2016, and have realised the full impact of this change. Funds have also highlighted to us their concerns about the potential disbenefit (such as loss of insurance) to members who are engaged while still meeting the lost definitions.

    The purpose of this meeting was to provide a shared platform for funds to voice their concerns with the ATO, and to brainstorm how funds and the ATO can work together to address and minimise unnecessary impacts on both funds and members. Participants of Monday’s meeting agreed the forum was highly useful and provided clear direction and commitment which could benefit both funds and members.

    Highlights of the meeting included:

    • Updates agreed to the Lost Member Statement Protocol, in particular to guidance around permanent exclusions and recognition of member engagement
    • Changes to the terms of the ATO’s Provision of Address (POA) process to facilitate better use of the address information
    • Better access for funds to their members’ ATO held money data in the interim before SuperMatch2 becomes available

    Following is a summary of what was discussed, including the high level outcomes of the consultative process.

    1. Revision of the Lost Member Statement (LMS) Protocol document

    Funds asked for the ATO to provide more guidance around how the intent of lost and unclaimed regulations should be administratively interpreted, to enable funds to act in their members’ best interests.

    Particular focus was taken on the permanent exclusion element of lost definitions, and highlighting in the protocol the ATO’s expectation that funds would apply their own understanding of an individual’s circumstances (such as their previous account activity, their account balance, or their age) when determining how frequently they should engage with excluded members to check if their exclusion is still relevant.

    The second theme that resonated throughout the discussion was the need to determine a shared understanding of the intent of the lost regulations, and for the ATO to provide guidance around how this intent was to be practically realised by funds, within the bounds of the legislation. This discussion addressed a major concern of funds, that members will have their accounts transferred to the ATO as USM under the expanded USM threshold, when they are aware of their account/s and rely on their membership with their fund (e.g. for insurance).

    Outcome: The ATO committed to significant revision of the Lost Member Statement Protocol to better reflect best practice administration of the regulations, including:

    • restructuring the protocol document to make it more accessible and intuitive
    • provided overarching guiding principles for industry best practice
    • clearly differentiating between what is legislative and what is guidance from the ATO
    • including additional examples which address some requested less typical scenarios, where the regulations could be misinterpreted
    • revisiting definitions to ensure they are not providing unnecessary restrictions on funds and members

    2. The Provision of Address process

    Progressing from discussion of the LMS Protocol, the agenda moved to an existing strategy used by the ATO to help funds remove their members from the lost member register (LMR): the provision of address (POA) process.

    The ATO currently runs a bi-annual process, providing funds with address and contact details for members who have appeared on the funds’ previous lost member statement. The address and contact details provided reflect what the member has used in their current tax return. From December 2015, the member’s TFN is also provided to the fund which will improve the matching process.

    The terms and conditions of the POA process currently state that funds are encouraged to replace the address they currently hold for their lost un-contactable members with the one provided by the ATO, but are expected to contact their lost transferred members or lost inactive members prior to using the information to either replace or confirm, their account (e.g. for the account verification test within the lost regulations).

    Funds highlighted how this latter expectation created unnecessary red tape, and is problematic for their lost inactive members, while providing no real protection for member accounts (i.e. the worst that could happen for a member if their address was replaced with an ATO-held address which was not their preferred address, was that the member continued to be lost).

    Funds asked that the conditions for use of the POA information be revised to enable them to automatically update the address of lost inactive members, where the address held by the fund did not match the address provided by the ATO. They also asked that the POA terms and conditions reflect the ATO position that either confirming or replacing an address through the POA process was sufficient to meet the address verification test within the lost regulations, which would essentially stop the member from currently being lost.

    Outcome: The ATO committed to reviewing their terms and conditions for the POA process, and, pending relevant technical checks, to ensure there was no legal impediment to update the document to reflect this discussion.

    3. Provision of USM data to funds to enable them claim USM on their members’ behalf

    The final part of the meeting was used to discuss a strategy proposed by the Link Group, in which the ATO would provide funds with USM data for members with an account within one of their funds (where the member does not hold interests elsewhere), to enable them to seek member consent before claiming this money from the ATO (aiming to raise inactive members’ account balances above the $4000 USM threshold and action rollovers which would make them ineligible as USM).

    In the absence of SuperMatch2, this work would need to be processed manually and is resource-intensive, so cost and timing limitations impacted this approach – the ATO as well as interested funds would have to act fast to enable targeted communication campaigns to reach individuals in time to prevent their accounts being caught up in this USM reporting and payment period.

    A few suggestions were raised:

    • The ATO would provide this opportunity to all funds. Interested funds would then nominate when they could make use of the data (e.g. funds who could not use the data before the end of the current reporting period would inform the ATO, so that funds with immediate use for it could be prioritised).
    • Funds requesting the data for use prior to the end of this reporting period could not expect to have rollovers actioned by the ATO before 30 March – they would agree to use the information to engage their members, and obtain consent to claim the USM on their behalf. This would enable funds to remove members from their USM Statement, while also allowing the ATO sufficient time to manually process the anticipated influx of USM provider claims.
    • Funds would agree to encourage members to use MyGov for a fast rollover of USM (as this is an automatic process), while offering to complete the claim on their behalf and informing the member that this could take an extended period of time to be actioned.
    • Funds widely supported an ATO suggestion that the ATO could potentially include member data to identify where a member already held a MyGov account, although this would need to be confirmed.

    Outcome: The ATO would produce a short terms of agreement document to be circulated along with an invitation for funds to participate in this strategy. This TOA would outline how funds were expected to use the data provided by the ATO, and a shared understanding of the limitations of the process and a plan to maximise the usefulness of the data for funds, as outlined above.

    Industry Attendees:

    Eoin Burke (Superpartners); Tina Cifelli (AMP Life); Andrea Cooper (Financial Synergy); Fiona Galbraith (ASFA); Sameran Khoshaba (CBA – Comminsure); Kelly Kerr (BT); Nguyen Namphi (CBA – Colonial First State); Sue Pearce (Link Group – AAS); Warren Ramage (Precision Administration); Ian Roberts (NAB); George Strilakos (Unisuper); David Haynes (AIST); John Hardas (Link Group); Amanda Gunn (Mercer); Dannielle Farrugia (Superpartners); Jane O’Ryan (Qsuper)

    For more information

    If you require any further information or clarification please forward any concerns regarding this matter through to our SuperCRT@ato.gov.au mailbox.

      Last modified: 25 Nov 2016QC 50611