Hard legal facts get in way of proposed super policy

Mike Taylor

Managing Editor and Publisher

4 May 2026

The joint advice and accounting groups have backed the Government’s efforts around financial abuse but have warned that succeeding in preventing perpetrators from accessing victims’ super death benefits will require foundational legislative change.

The advice and accounting groups have pointed out that the legislative structures underpinning superannuation including the Superannuation Industry (Supervision) Act and the common law fiduciary duties imposed on super trustees mitigate against easy change.

The joint submission to Treasury details the legislative and regulatory barriers which will need to be addressed.

The submission, signed off by Chartered Accountants ANZ. CPA Australia, the Institute of Public Accountants, the Financial Advice Association of Australia and the SMSF Association says they jointly support the core objectives of the underlying proposed reforms outlined in the Treasury discussion paper.

“However, while the paper provides three options for policy reform, our concern is that these options do not appear to address the initial foundational issues that we believe must be addressed before potential solutions can be considered,” it said.

To that end, the following issues, and potentially other topics, must be considered before deliberating on any solutions:

1. Trustees of all trusts, including superannuation funds, have a number of common law fiduciary duties, including the following: a. A duty of loyalty – this duty takes a number of forms; however a key matter is that trustees must adhere to the terms of a trust deed and may only “depart from the words of the trust with the approval of the court”1 b. Duty to act impartially between beneficiaries – that is, a trustee “must act impartially between beneficiaries, particularly in matters concerning the distribution of the income and capital of the trust, unless otherwise authorised by the trust”
2. Under the Superannuation Industry (Supervision) Act 1993 (the SIS Act), APRA regulated superannuation fund trust deeds are assumed to contain various covenants including, trustees to: a. Perform the trustee’s duties and exercise the trustee’s powers in the best financial interests of the beneficiaries – see subsections 52(2)(c) and 52A(2)(c). b. Act fairly in dealing with classes of beneficiaries within the entity – see subsection 52(2)(e). c. Act fairly in dealing with beneficiaries within a class – see subsection 52(2)(f).
3. Under the SIS Act, Self-Managed Superannuation Fund trust deeds are assumed to require a trustee to perform its duties and exercise the trustee’s powers in the best financial interests of the beneficiaries – see subsection 52B(2)(c) and deeming provision contained in section 52C.
4. Binding death benefit nominations (BDBNs): a. We consider that it will be extremely difficult for superannuation fund trustees to deem such documents invalid, given that they are intended to bind a trustee to perform a specific action on the death of a member. b. Some BDBNs include cascading clauses, similar to those found in some Wills. For example, a super fund member may want their death benefits paid to specific individuals. However, if one or more of those individuals pre-decease the fund member, alternative payment options may be specified. In these cases, if the beneficiary of the BDBN was determined to be a perpetrator of family and domestic violence, would this invalidate the whole document or only part of it?
5. Reversionary pensions – under these pensions, when the original pensioner dies, the pension automatically begins to be paid to their nominated reversionary. Such pensions are a contract. We note that the discussion of superannuation death benefit nominations on pages 5 and 6 of the consultation paper does not consider reversionary nominations.
6. Life insurance contracts – it is possible to purchase life annuities with superannuation savings; under many such contracts, if the annuitant dies, then some form of death benefit would be payable.

The submission said the groups share the desire to expedite the claims staking process as fairly and justly as possible, but the objective needed to be balanced against common law and the statutory obligations imposed on superannuation fund trustees.

“The potential impact this may have to all members of a superannuation fund cannot be overlooked,” it said.

“We note that the splitting of superannuation benefits when a couple are separating must be officially authorised by the Federal Circuit and Family Court of Australia. Similarly, in estate matters, where a dispute arises over the terms of a will or the application of the forfeiture rule, Supreme Court action is needed to make such a determination. Notably, the forfeiture rule for estate matters sits on a bedrock of a significant body of common law guiding the court in a wide-ranging set of circumstances.

“We acknowledge the desire to find a solution that is just, straightforward, expeditious, efficient, and cost-effective. In practice, the nature of these cases can be highly complex and highly fact dependent,” the submission said.