Superannuation Complaints Tribunal

Posted by Reg Biddulph | Dec 19, 2016 | 0 Comments

(Last Updated On: September 25, 2017)

I have dealt with a number of Superannuation Death Benefit claims recently so it might be timely to make few comments about Superannuation Death Benefits.

The common situations where disputes arise are:

1) there is a “blended family” (that is where the current spouse of the person who dies is not the parent of the deceased person's children); and

2) Where the Deceased person is a young person who has not made a will.

The second situation is a particularly traumatic one.  Unfortunately, very few young people (people under, say 35 years of age) have gone to the trouble either of making a will or preparing a Binding Death Benefit Nomination.  Why would they, as they don't expect to die? However, most Superannuation funds have a ‘death insurance' component.  This will usually be worth over $200,000.00 and quite often a lot more.  Who will the Death Benefit be paid to?

Case Study 1

The Deceased person committed suicide at age 30. He did not have a will. He did not make any Binding Death Benefit Nomination. He had two superannuation funds (one only had a contributions balance of less than $1,000.00 but an insurance death benefit of nearly $400,000). The other had a death benefit of nearly $200,000.00 most of which was also death insurance. So the total of both Superannuation funds was over $600,000.00. He was not married and had no children. He did, however, have ‘girlfriend' who had been living with him for about four months.  In Western Australia, a “de facto spouse” is only entitled in a Deceased estate if they are living in a de facto relationship immediately before the deceased person died and the relationship had existed for two years before the person died (for a case example about “immediately before death” read the case of: Chan v Mazurkiewicz. If the Superannuation Death Benefit was paid to the Deceased's estate then it would be divided between his siblings (one half) and the other half to his parents. The relationship between the Deceased and the “girlfriend” was (according to the Deceased's mother) a volatile one and was unlikely to have continued. Both Superannuation Funds made a determination to pay the death benefit to the ‘girlfriend'.  Needless to say the Deceased's mother was distraught.

Complaints were made to the Superannuation Complaints Tribunal (“SCT”).  In all probability, the decisions of the Super fund trustees would have been upheld by the SCT.  However, a deal was negotiated between the parties whereby they agreed to split the Superannuation 50/50.

Case Study 2

In this matter, the deceased was aged only 33. Again, death was by suicide. He had Super death benefits payable of about $530,000 and other assets (including a house) with a net value of about $300,000.00. He did not have a will and there were no Binding Death Benefit Nominations in place.  He had been in a ‘de facto relationship” for about six years.  However, just before he committed suicide, the relationship allegedly came to an end.  In point of fact, the Deceased's parents believed that the Deceased committed suicide after the de facto declined the Deceased's request to marry him. As in case 1, if there was no de facto entitled in the deceased's estate, all of his estate would be divided between his parents and his siblings. The Superannuation Funds in this case decided to pay the funds “100%” to the legal Personal Representative.  However, the de facto (who denied that the relationship between she and the deceased had come to an end) foreshadowed complaints to the Superannuation Complaints Tribunal and also a claim under the Family Provision Act. Again the matter was settled by a negotiation on the basis that the estate was split 50/50.

Superannuation Complaints Tribunal

The Superannuation Complaints Tribunal (‘SCT”) deals with complaints from persons aggrieved with a decision made by the Trustees of a Superannuation Fund. Very commonly, the complaints are made when the Superannuation Fund has decided to pay a death benefit to the “de facto” spouse of the Deceased. In many cases, the complainant will be the adult children of the deceased or the persons who would otherwise inherit the Deceased's estate either through the Deceased's will or on an intestacy (i.e. no will).  Typically, the allegation will be that the “de facto” was not really in a de facto relationship with the Deceased (they were ‘just friends'), or the relationship had ended, or, simply, “the deceased wouldn't have wanted him/her ot get the death benefit.”

Most people, of course, have little experience of what happens to superannuation when a loved one dies.  Unfortunately, this is an area of the law that has outcomes, I personally think, that is both unexpected and contrary to what most people think should occur. Most people would agree that any superannuation death benefit should be paid to persons who are financially dependant upon the Deceased. However, they quite reasonably would expect that those people would be the persons either set out in the Deceased's will or that they woud be the persons who take on an intestacy (if there is no will).  The trustees of Superannuation see things quite differently, as guided by the legislation and the terms of the Superannuation Trust Deed. The trustees will invariably point to the fact that if a person wanted the superannuation death benefit to be paid in a particular way, that person would have made sure a Binding Death Benefit Nomination was in place (or a Non Lapsing Nomintion- if the terms of the Super fund trust deed permits it).  In partiuclar, if the deceased has wished the death benefit to be dealt with by their will, they would have specified their legal personal representative (that is the executor of the will) as the nominated beneficiary. So if there is no Binding Death Benefit Nomination, the trustees will look to pay to those persons who were financially dependant on the Deceased.  The trustees of the Superannuation Fund will look for persons who would have recieved financial support from the Deceased if he had simply retired (rather than died). A summary of how death benefits are dealt with is published by the SCT see: Death Benefits Brochure A  deeper understanding of how death benefits are resolved can be found here: Key Considerations that apply to Death Benefits Key Considerations that apply to Death Benefits.

There are also case studies set out on the Superannuation Complaints website that give examples of various situations. What the brochures and case studies don't give an insight into is how little evidence is acceptable to a trustee before it will decide that a person was ‘financially dependant' upon the Deceased. It is often the case that the Superannuation Fund decides that it will pay out to the ‘de facto' even if that relationship has only been in existence for a short time (and other people might conclude that the Deceased and the de facto were only in a casual relationship). You are strongly encouraged to seek legal advice as soon as possible after a person dies.  Also, do not rely upon the fact that someone else ‘in the family' is seeking legal advice (particulary if you are the person who was in a relationship with the deceased)..  It is important that you get independent legal advice early in the piece.

Challenging a Decision of the Superannuation Fund in the Superannuation Complaints Tribunal

The prospects of successfully challenging a decision of the Superannuation Fund are slim: in the reporting year ending 2015 there were some 2668 written complaints to the SCT and 1,739 complaints that were either withdrawn or resolved (of which about 40% related to the payment of death benefits).  Of the 1739 complaints dealt with only 286 got to the final stage of being reviewed by the Tribunal.  In most cases (224) the original decision of the Superannuation fund was upheld.  In percentage terms, this means about 80% of the matters heard by the SCT are upheld (or 20% overturned) and that, overall, only about 3.5% of all applications have a successful outcome. (see page 19 of the annual report) SCT Annual Report 2014-15

The reason why most complaints are unsuccessful is because the Superannuation Complaints Tribunal does not simply make a new determination as to how any death benefit should be paid but rather decides whether it was ‘unfair or unreasonable' for the Superannuation fund to make that decision in the first place.

However, all is not grim: of the 293 concluded death benefit cases in 2014/15, 209 (71.3%) were settled.  In other words, even though a decision of the Tribunal is unlikely to be overturned, most clams result in some sort of settlement. No doubt a factor in that leads to settlement is the lengthy delay in matters progressing through the complaint process.

If you wish to make (or defend) a complaint to the Superannuation Complaints Tribunal, contact Reg Biddulph

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About the Author

Reg Biddulph

Graduated in law from the University of Western Australia in 1987. He has been a partner at Biddulph & Turley since 1991. He is a member of the Society of Trusts and Estate practitioners and is professionally experienced in all areas of deceased estates. In September 2016 Reg was recognised ...


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