The law
You will find the provisions governing the reporting and payment to the ATO of unclaimed money for deceased members in Part 3 of the Superannuation (Unclaimed Money and Lost Members) Act 1999 (SUMLMA).
Under section 14 of the SUMLMA, an amount payable in respect of a member of a fund is taken to be unclaimed money if the all 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 two 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.
Best practice – ATO guidance
On being informed that a member has died, you have 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 people entitled to the money have been identified, but some cannot be contacted despite reasonable efforts (or you are unable to ensure the benefit will be received by the identified individual), the entitlements for those will be unclaimed money.
However, the remainder of the deceased's benefits can be paid to the other people entitled to it.
Additional information required after reporting
If the member has died (or subsequently dies) and we are contacted by a potential beneficiary, we will contact you, regardless of whether money is paid to us as unclaimed money, a lost member account, an inactive-low balance account or superannuation of former temporary residents.
We need to establish whether you either:
- were still the holder of the money at the time of the member’s death, or
- would have been under a binding obligation to pay the member's benefit to a specific or nominated person.
This information is necessary to help us determine any such claims to the amount.
Example: No amounts received for over two years
ABC super fund receives confirmation a member has died.
They determine 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, they make extensive efforts to identify and contact potential beneficiaries.
They determine there are three beneficiaries entitled to claim a death benefit – Brian, Gertrude and Ali – but can only locate Brian.
They have satisfied themselves of Brian's entitlement, so his determined share of the money can be paid to him as a death benefit.
The fund is unable to locate or contact Gertrude or Ali, so their share of the money becomes unclaimed money.
End of example
Example: Amounts received shortly before the member's death
TUV fund receives notification that a member, Angelique, has died. Angelique's employer sent a contribution shortly before her death.
Over a period of 18 months following Angelique's death, TUV fund make extensive efforts to identify and contact potential beneficiaries. Their efforts have been unsuccessful.
Angelique's money is not unclaimed. Although she is deceased and the fund has made reasonable efforts over a reasonable period to identify and contact the people entitled, the money is not unclaimed as it has been less than two years since a contribution was made to Angelique's account.
End of example
Example: Pension phase
Braiden is a member of ABC super fund and he has an account in pension phase when the fund is notified of his death.
After making reasonable efforts, and after a reasonable period of time has passed, ABC super fund is unable to establish contact with beneficiaries entitled to receive the benefit. They are unable to ensure these beneficiaries receive the benefit they are entitled to. Braiden'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.
End of exampleSee also:
Fund protocol for unclaimed superannuation money of deceased members.