Lawyers urge Govt review of super death benefit regime
The Government has been urged to use the May Budget to fund a review of superannuation death benefit nominations to settle the law in circumstances where a superannuation fund member dies before receiving their entitlement.
The Law Council of Australia has used its pre-Budget submission to call for the funding of a review describing it as “long overdue”.
In doing so, the Law Council said that further clarity around the law on death benefit nominations will provide autonomy to older people and reduce the risk of elder abuse.
“Superannuation entitlements represent one of the largest assets owned by most Australians upon their retirement. However, where a superannuation fund member dies before receiving the entitlement, the law is not settled in regard to how superannuation death benefits should be disposed and there is significant complexity and ambiguity about the effect of such nominations in a range of different circumstances,” the Law Council said.
In doing so, the Law Council noted that the Australian Law Reform Commission (ALRC) had in 2017 recommended a review be conducted by the Treasury into the structure and drafting of the provisions in the Superannuation Industry (Supervision) Act 1993 and Superannuation Industry (Supervision) Regulations 1994 to seek to address these complexities and ambiguities.
“As noted by the ALRC, the ability to make a binding death benefit nomination is a key aspect of advance planning and clarity around the process for making these nominations will assist to provide autonomy to older persons and reduce the risk of elder abuse,” the submission said.
A review is long overdue. Binding nominations (and non-lapsing binding nominations) need to allow an option of “If this person is not available to receive the benefits (eg they are already deceased or pass away a the same time as the super fund member) who would you next want benefits to go to?” Much like a Will where a person can state all of my assets are to pass to my spouse, If my spouse is deceased at the time, then the assets to be distributed to my 3 children evenly / or in a specific split like 20%/40%/40%. The outcome needs to be simple enough that the average person can understand it. (I’m not a solicitor so excuse the lack of legal terms).