Unclaimed superannuation money and lost member accounts

Payment of accounts

When paying accounts under the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA), trustees should consider the following guidance when assessing accounts for USM purposes when an SFT has been undertaken. This will apply regardless of whether the successor fund has the same trustee as the transferring fund. For more guidance, see our Unclaimed superannuation money protocol.

Members aged over 65 years

Under subsection 12(1) of the SUMLMA, an amount payable to a member of a fund (including accumulation, defined benefit, and pension members) is taken to be unclaimed super money if all the following apply:

• the member has reached eligibility age
• you have 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 2 years
• after a 5-year period since you last had contact with the member, you have been unable to contact the member again after making reasonable efforts.

The transfer of a member’s superannuation benefit to a successor fund is considered an amount received in respect of a member for the purposes of the successor fund determining the 2-year period under subsection 12(1) of the SUMLMA. Similarly, the 5-year period specified for contact would commence from the date of the SFT.

Deceased members

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

• The member has died.
• You determine 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.
• You have 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 2 years.
• After making reasonable efforts and after a reasonable period has passed, you are unable to ensure the benefit is received by the person who is entitled to receive the benefit.

The transfer of a member’s superannuation benefit to a successor fund is considered an amount received in respect of a member for the purposes of the successor fund determining the 2-year period specified under section 14 of the SUMLMA.

Inactive low-balance accounts

Section 20QA of the SUMLMA provides the definition of an inactive low-balance account (ILBA) as an account that meets all the following criteria (subject to limited exceptions):

• No amount has been received for the last 16 months.
• The account balance is less than $6,000.
• The account is not a defined benefit account.
• The member has not met a prescribed condition of release.
• Insurance is not being provided in the account.
• The fund is not an SMSF or small Australian Prudential Regulation Authority (APRA) fund.

The 16-month period will recommence for the successor fund as the transfer of member's superannuation is considered an amount received under section 20QA of the SUMLMA.

Lost members

For the purposes of the SUMLMA, a member of a super provider is a lost member if the member is:

• a lost member within the meaning of regulation 1.03A of the SISR
• a lost RSA holder within the meaning of regulation 1.06 of the Retirement Savings Account Regulations 1997.

These regulations define a member of a super provider to be a lost member at a particular time (subject to limited exception) if they:

• satisfy the definition of being ‘uncontactable’
• satisfy the definition of being an ‘inactive member'
• joined the fund or RSA from another super provider as a lost member.

If a lost member's superannuation benefit is transferred to a successor fund, the member’s ‘lost’ status moves from the transferring fund to the receiving fund. The successor fund will need to open the new account with the lost status member account attribute as lost, since the member was already lost in the transferring fund.

For more details, refer to Reporting account changes in the Member account reporting and validation protocol.

Lost member accounts and USM

The money held for a lost member remains with the successor fund, unless it meets 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. In these cases, it is paid to the ATO as USM. For more guidance, see our Lost members register – protocol.

Small lost member account

You must report and pay to the ATO amounts that meet the definition of lost member account – small account.

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

• The member on whose behalf the account is held is a lost member.
• The balance of the account (on the unclaimed money day) is less than $6,000.
• The account does not support or relate to a defined benefit interest.

At the end of an unclaimed money day, you must identify any accounts that belong to lost members where the balance is less than $6,000.

Insoluble lost member accounts

You must report and pay to the ATO amounts that meet the definition of a lost member account – inactive account of an unidentifiable member. This type of lost member account is commonly referred to as an insoluble lost member account.

Under subsection 24B(2) of the SUMLMA, an account is taken to be an insoluble lost member account if all the following apply:

• The member on whose behalf the account is held is a lost member.
• You have not received an amount in respect of the member within the last 12 months.
• You are satisfied it will not be possible, considering the information reasonably available, to pay an amount to the member.
• The account does not support or relate to a defined benefit interest.

The transfer of the member account to a successor fund is considered an amount received in respect of a member for the purposes of the successor fund determining the 12-month period specified under subsection 24B(2) of the SUMLMA.

SFT and USM reporting

If an SFT occurs between the unclaimed money day and the scheduled statement day, the successor fund does not have reporting or payment obligations with respect to unclaimed money, lost member accounts and inactive low-balance accounts for that unclaimed money day. The reporting and payment obligations remain with the transferring fund.

For SFTs that occur on 30 June, or on an unclaimed money day, lodge an enquiry through our Super Enquiry Service.

Former temporary residents and section 20C notices

If a transferring fund holds outstanding section 20C notices from the ATO identifying former temporary residents, the transferring fund should respond to the notices prior to the SFT.

Where a transferring fund cannot process a section 20C notice for a particular member due to a pending claim, the transferring fund must respond to the section 20C notice with error code SUPER.GEN.RLVR.7. For more details, refer to our Rollover user guide.

For example, a transferring fund may have a pending Departing Australia superannuation payment claim which will be paid to the member prior to the SFT, rather than to us as USM.

If, after responding to the notice with an error code, the pending claim is unsuccessful, the following actions can be taken:

• If the transferring fund still holds the account, they can pay the amount to us as USM in the next reporting period via the Rollover Transaction Request using USM reason code ‘R’.
• If the SFT has taken place and the account has been transferred, the successor fund can pay the amount to us as USM in the next reporting period via the Rollover Transaction Request using USM reason code ‘R’.

Note: A new section 20C notice will not be issued to the successor fund. For more information, refer to our Lost members register – protocol.