Inactive member test
A member is lost and inactive under sub regulation 1.03(1)(b) of the SISR or sub regulation 1.06(1)(b) of the RSAR when:
- they joined more than 2 years ago
- they joined as a standard employer-sponsored member (applies to funds only, not RSAs)
- you receive no contributions or rollover amounts for that person within the past 5 years.
Example 1: positive act
An individual has met the permanent exclusion test by way of a 'positive act'. However, they haven't:
- made any contributions or rollovers to their account
- demonstrated any indication of engagement.
We expect you to revisit your permanent exclusion of this member from being considered lost after a reasonable amount of time.
When determining what a reasonable amount of time is, you should consider your member's individual circumstances and decide whether your action is appropriate.
End of exampleEmployer-sponsored arrangements
An employer-sponsor is an employer who contributes, or would contribute, to a fund for either:
- the benefit of a member of the fund who is an employee or an associate of the employer
- the benefit of dependants of the member in the event of the member's death, in accordance with an arrangement between the employer and the trustee of the fund.
A standard employer-sponsored member is a member of a regulated super fund for whom an employer-sponsor contributes, or would contribute, wholly or partly according to an arrangement between the employer-sponsor and the trustee of the fund.
No contribution or rollover in 5 years
You must determine if you've received a contribution or rollover for the member or account holder within the last 5 years from the date you reported the member as a lost member.
The reference to the non-receipt of a contribution or rollover in the past 5 years applies to the membership with you and not to an individual account.
Example 2: additional accounts
John joined ABC Fund and opened an account as a standard employer-sponsored member in 1990. Over the subsequent years, he opened additional accounts with the same fund on a public offer member basis. In the last 5 years, the only contributions made have been to one of these additional accounts.
Although the employer-sponsored account alone would meet the 5-year inactivity test, John isn't considered a lost and inactive member under the inactive member test. This is because he has contributed in the last 5 years in relation to an account with that provider.
End of exampleInactive members and permanent exclusion
There are 2 tests you should apply when considering if a member should be permanently excluded from being lost. For inactive member accounts, these tests are:
The positive act exclusion test
The positive act exclusion test can only apply in relation to members who have satisfied the inactive member test – that is, they originally joined as standard employer-sponsored members.
To determine whether the positive act exclusion applies, the inactive member test is read in conjunction with the exclusion. Generally, if there has been any positive activity by the member in relation to their membership with you, then the member won't be considered lost.
The example of ‘positive act’ given in the legislation is ‘deferring a benefit’. This can also apply when a third party (i.e. a financial advisor or agent) authorised to act on the member's behalf is involved. For example, the third party may tell you of the member's wish to amend their investment strategy.
Positive activity may include member activity such as:
- deferring a benefit in the fund
- electing to rollover all or part of their benefit from their original policy to another product (and it's not an automatic transfer)
- initiating a transaction (for example, a switch)
- changing their contact details
- initiating a change to their account (such as nominating a beneficiary)
- making an enquiry (such as an account balance query, performance of their account) or complaint
- responding to a communication issued by you
- accessing your secure website to view or obtain information about their account.
This activity indicates the member is aware of where their money is and is engaged with their account. Therefore, you should exclude the member from being lost.
The legislation doesn't outline for how long a positive act should be effective before you check in with your member again. When considering what a reasonable amount of time is you should consider your member's individual circumstances and decide whether your action is appropriate.
A positive act doesn't include a failure to act, which may arise where the super provider writes to the member asking them to respond if they don't want the provider to do something. For more information, see Westpac Banking Corporation v Commissioner of TaxationExternal Link (1996) 70 FCR 52; [1996] FCA1834; 96 ATC 5021; 34 ATR 143.
Contact by the member indicating they want to remain in the fund or RSA indefinitely
This second permanent exclusion test also applies to uncontactable members.
Lost and inactive examples
When considering these examples, remember that the best outcome is for the member to be made aware of their account. Therefore, you should make reasonable efforts to contact them.
Example 3: no contributions for the past 5 years
The member has been a member for over 2 years.
You haven't received contributions for the past 5 years.
The member is not a standard employer-sponsored member.
Because the member isn't an employer-sponsored member, the inactive test doesn't apply to the member. Therefore, the member isn't lost and inactive.
End of example
Example 4: The member's address hasn't been verified in the past 2 years
The member has been a member for over 2 years. You haven't received contributions for the past 5 years.
The member is a standard employer-sponsored member.
You haven't verified the member's address in the past 2 years.
The permanent exclusion criteria don't apply.
All lost inactive member tests have been satisfied, therefore the member is lost inactive.
End of example
Example 5: standard employer-sponsored member
The member has been a member for over 2 years. You haven't received contributions or rollovers for the member in the past 5 years.
The member is a standard employer-sponsored member.
You verified the address in the past 2 years.
The permanent exclusion criteria don't apply.
The member's address has been verified in the last 2 years and you have no reason to believe the address is now incorrect. Therefore, the member isn't lost inactive.
End of example
Example 6: travelling overseas
The member has been a member for over 2 years.
You haven't received contributions or rollovers for the member in the past 5 years.
The member is a standard employer-sponsored member.
The member has contacted you and informed you that:
- they would be travelling overseas for 5 years
- they wish to remain a member of the fund during this time.
The ‘permanent exclusion’ criteria applies. However, considering the individual's circumstances, you should review this situation in 5 years.
End of example
Example 7: Super money is rolled over
A person starts a new job with employer ABC. The person is enrolled by his employer in fund XYZ as a standard employer-sponsored member.
Two years later, fund XYZ winds up.
Rather than go into the successor fund, the member decides to use an existing account he had previously opened with the ABC Public Offer Fund as a public offer member.
The member rolls his super money from fund XYZ into his ABC Public Offer Fund account.
The member didn't join the ABC Public Offer Fund as a standard employer-sponsored member, so the inactive test doesn't apply to the member. Therefore, the member can never become lost inactive.
End of example
Example 8: left employer
The member joined the industry sub-plan of XYZ Fund as a standard employer-sponsored member. The member subsequently left the employer.
Under the sub-plan rules, because the member has left the employer he can no longer remain in the sub-plan.
After considering his options, the member transfers his super into the public offer plan of XYZ fund.
Even though he is now in the public offer section of the fund (and is considered to be a public offer member), his membership first began with XYZ Fund through a standard employer-sponsored arrangement.
The lost inactive criteria will apply for this member. The member could become lost inactive if a contribution or rollover isn't made for a 5-year period.
End of exampleFor more information, see Reasonable effort to contact the member.