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When money must be transferred to the ATO

Section: 11.4

Twice a year, on 31 December and 30 June (the 'Unclaimed Money Days') superannuation providers must determine whether any of their member accounts are 'unclaimed super' under the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLM Act) and, if so, transfer the relevant amounts to the ATO by 30 April or 31 October respectively (the 'Scheduled Statement Days'). Individuals may then claim back their superannuation from the ATO at any time, plus -since 1 July 2013 -interest.

Effective for half year periods from 1 January 2018, superannuation providers no longer have to provide biannual lost member statements to the ATO, but instead report information, via the Member Account Attribution Service (MAAS). Minimum reporting requirements will still be twice yearly, although funds can choose to report more frequently. All reporting obligations of super providers under the SUMLM Act are now incorporated in member information statement requirements.

From 1 July 2019, as part of the protecting your super package of reforms a new category of superannuation accounts (inactive low balance accounts) must be transferred to the ATO.

What is unclaimed super?

Under the SUMLM Act, there are six categories of members whose superannuation may be deemed unclaimed as detailed below.

1 Member age over 65

An amount payable to a member age 65 or over is taken to be unclaimed money if:

  • the fund has not received an amount in respect of the member within the last two years, and
  • after the end of a period of five years since the fund last had contact with the member, the fund has been unable to contact the member again after making reasonable efforts.

2 Non-member spouse

An amount payable to a non-member spouse is taken to be unclaimed money if:

  • a payment split applies to a member's splittable payment, and
  • as a result, the non-member spouse is entitled to be paid an amount, and
  • after making reasonable efforts and after a reasonable period has passed, the fund concerned is unable to ensure that the non-member spouse receives the amount.

3 Deceased member

An amount payable in respect of a member is taken to be unclaimed money if:

  • the member has died, and
  • the fund determines that a benefit (other than an income stream) is immediately payable in respect of the member, and
  • the fund has not received an amount in respect of the member within the last two years, and
  • after making reasonable efforts and after a reasonable period has passed, the fund is unable to ensure that the benefit is received by the person who is entitled to receive the benefit.

4 Former temporary resident

A former temporary resident's benefit becomes unclaimed super if:

  • the member held an eligible temporary visa that has ceased to be in effect and the member left Australia after starting to hold the visa, and
  • the member is not currently the holder of a temporary visa, a permanent visa or a prescribed visa, and
  • the fund was notified by the ATO (written notice) to transfer the unclaimed super account, and
  • the member is neither an Australian nor a New Zealand citizen and has not made a valid application for a permanent visa, and
  • at least six months has passed since the later of:
    • the visa ceasing to be in effect
    • the member leaving Australia

5 Small or Insoluble lost members accounts

A lost member account of a fund is taken to be unclaimed super if:

  • it does not relate to a defined benefit interest, and
  • the member is a 'lost member' (see below), and
  • the balance is less than $6,000 (small lost member account), or
  • the fund has not received an amount in respect of the member within the last 12 months and the fund is satisfied that it will never be possible to pay an amount to the member (insoluble lost member account).

The ATO has indicated that, as a general rule, if the fund has or can reasonably obtain (eg from an employer who previously contributed) at least two complete pieces of quality information about the member, this could enable them to determine and verify the member's identity and therefore pay an amount to the member. However, the decision as to whether sufficient information is held is ultimately up to the fund.

Definition of 'lost member'

A member is taken to be a lost member if they are either uncontractable or Inactive:

Uncontactable lost member

A member will be considered uncontactable if:

  • either the fund has never had an address (electronic or non-electronic) for the member, or the fund has made one or more attempts to send written communications to the member at the member's last known address, and the fund believes, on reasonable grounds, that the member can no longer be contacted at any address known to the fund, and
  • the member has not contacted the fund within the last 12 months, and
  • the member has not accessed details about their interest in the fund from any electronic facility of the fund (eg by logging into fund's website), and
  • the fund has not received a contribution or rollover in respect of the member within the last 12 months.

Inactive lost member

A member will be considered inactive if:

  • the individual joined the fund as a standard employer-sponsored member more than two years ago, and
  • the fund has not received a contribution or rollover in respect of the member within the last five years.

How to prevent becoming a lost member

A member can be permanently excluded from becoming a lost member in the following circumstances:

  • an inactive member indicating by positive act (eg deferring a benefit in the fund) that they wish to continue to be a member of the fund
  • a member contacting the fund at any time after they joined and indicating that they wish to continue being a member of the fund
  • the member being a member of a self-managed super fund.

Importantly, while the above actions will prevent a member from being deemed a lost member, they will not necessarily prevent one of the other categories of unclaimed money from applying to the account (ie unclaimed money categories), which do not require the member to have met the definition of a 'lost member'.

6 Inactive low-balance accounts

A super account is an inactive low-balance account if all of the following criteria are met on an unclaimed money day:

  • no contribution or rollover has been received for a continuous period of 16 months
  • the account balance is less than $6,000
  • the member has not met a condition of release
  • the account is not a defined benefit account
  • there is no insurance on the account
  • the fund is not an SMSF or small APRA fund.

What are the implications of a member's super becoming unclaimed money?

Many accounts that are transferred to the ATO are small balances, which may benefit from being transferred, as fees and insurance premiums are no longer incurred and the ATO can automatically consolidate amounts it holds on the member's behalf with any active accounts a member may have.

The biggest risk to members is that the fund will cancel any existing insurance coverage on transfer to the ATO. Should the member later seek to apply for the same level of cover, due to their increased age and potential changes in medical history, they may not be offered a policy and/or be subject to higher premiums and/or exclusions.

Additionally, a member's benefits will no longer be invested in line with their previous investment choice/default option, causing them to miss out on the potential for future capital growth and earnings. The ATO's payment of interest at the rate of CPI has ensured members' balances will not go backwards in real terms; however even the most defensive investment strategies in complying super funds would be expected to outperform CPI over the medium to long term.

Automatic consolidation of super by the ATO

From 1 July 2019, the ATO is permitted to pay amounts held on behalf of a member to an active account of the member, where the reunited account balance will be $6,000 or more. Those amounts are made up of amounts paid to the ATO as unclaimed money, inactive low-balance accounts and lost member accounts.

In addition to the requirement that the reunited account balance will be $6,000 or more, the fund receiving the reunited amount must have received a contribution or rollover for the member within the previous financial year or the days in the current financial year before the ATO makes the payment to the fund. This is to ensure that the account for the person is considered active.

Hierarchy of factors

Where a member has more than one active account, the ATO must consider the following factors in determining into which account to pay the amounts.

  • First, the ATO pays the amount to a fund that the ATO has made a payment to during the current financial year for the person.
  • Second, the ATO pays the amount to the fund that received the most recent contribution during the previous or current financial year, based on the contribution information reported by funds to the ATO.
  • Third, the amount is paid to the fund that had the largest account balance for the member at the end of the previous financial year.
  • Finally, the ATO has the discretion to determine the fund that the amount is to be paid to.

These changes do not replace the existing consolidation processes which remain available to members.

MyGov and SuperMatch2 facilities

The ATO's SuperSeeker online service has been decommissioned and has been out of service since December 2016. Individuals can now check their super using ATO online services through myGov or by completing the 'Searching for lost super' form (NAT 2476) on the ATO website.

The myGov website can assist members in quickly searching for and locating:

  • active accounts
  • inactive accounts (no contributions made during the past 12 months)
  • lost accounts
  • pension accounts
  • ATO held super (eg unclaimed super).

SuperMatch2 is a similar system that can be used by super funds (with a member's consent) to locate and consolidate multiple superannuation accounts on the member's behalf.

Further information about these facilities can be found at www.ato.gov.au .

Last modified: Wednesday, July 24, 2019