Superannuation death benefits can be substantial, and people often don’t realise that there is life insurance attached to their superannuation.
When someone has not made a valid binding death benefit at the time of death, the superannuation fund decides how superannuation death benefits will be paid. They can decide to pay the death benefits either to the deceased person’s dependants or to their estate.
To assist you in understanding who superannuation death benefit dependents are, we recommend you read our blog ‘What happens to superannuation when someone dies?’.
When deciding which dependants of the deceased should receive the superannuation death benefits (and in what portions), the superannuation fund must make a decision that is consistent with the purpose of superannuation, that is, to provide for those who were financially dependant on the deceased at the time of death and who might have expected financial support from the deceased into retirement.
When making a decision about the payment of death benefits, key considerations the superannuation fund needs have are:
- Who are the deceased’s dependants
- Whether the deceased expressed any wishes about the payment of their superannuation death benefits (i.e. via a non-binding nomination or their will)
- Terms of the deceased’s will (if any)
- The degree of financial dependency on the deceased
- Past events and future possibilities
- Third party assistance / support
- Circumstances of the relationship with the deceased
- Availability of own income
- Differences in financial circumstances of the claimants
Generally, superannuation death benefits will be paid to the deceased person’s estate only if the rules of the fund require it or there are no dependants. The deceased person’s will stipulates who will receive their estate or, if there is no will, the rules of intestacy apply.
Generally, superannuation funds will pay death benefits to a spouse or minor children in preference to adult children.
If someone isn’t satisfied with the decision of a superannuation fund, there is a complaints process with the superannuation fund. If the complaint cannot be resolved within the fund’s complaints process, the complaint can be escalated to the Australian Financial Complaints Authority (AFCA).
There are strict time limits throughout the complaints process. It is therefore important to seek advice from an early stage to ensure these time limits are met.
If you require assistance with a superannuation death benefit claim or complaint, please get in contact by booking a free initial meeting with us or telephone us on 07 3174 5730.