T H E L E A D I N G I N D E P E N D E N T J O U R N A L FO R T H E S U P E R A N N U AT I O N A N D I N S T I T U T I O N A L F U N D S M A N A G E M E N T I N D U S T RY October 2010
Volume 24 - Issue 9
SCT fires due diligence broadside 11 WAR WITHOUT END Industry funds campaign set to continue
Superannuation fund trustees are on notice to conduct more thorough due diligence on the payment of death benefits following the overturning of a decision to grant 100 per cent to a deceased member’s mother-in-law. By Mike Taylor
12 COMMUNICATION Getting your message through to members
16 CUSTODY Print Post Approved PP255003/01111
Custodians prepare to take centre stage
20 INVESTMENT Passive investment comes with a price For the latest news, visit superreview.com.au MANDATES
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NEWS
The trustee did not make any enquiries about the member’s mother despite having been advised of her existence.
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uperannuation fund trustees have been sent a clear message that they need to conduct a full due diligence around the payment of death benefits, after a deceased member’s mother-in-law ended up receiving 100 per cent and a death benefit while his mother received nothing. A recent determination handed down by a Superannuation Complaints Tribunal panel, chaired by Tribunal chairperson Jocelyn Furlan, saw it amending the decision of the superannuation fund trustee to pay 100 per cent of the death benefit to the mother-in-law and instead ensure that 25 per cent was made to the deceased member’s mother living overseas. However, the case also revealed the degree to which the handling of death benefits by superannuation fund trustees could be complicated by disputation around deceased estates in circumstances where the member had died in 2003 without leaving a will and his primary beneficiary, his wife, had died less than four years later. The unusual case arose before the Tribunal because 3
EDITORIAL
Jocelyn Furlan
both the member and his wife had died, and while the mother-in-law had lived with the pair, the member’s mother lived overseas and had benefited from financial support from her son. The Tribunal made it clear in its determination that superannuation fund trustees have an obligation to seek information about possible recipients of death benefits if they are aware of their existence. It said that the trustee did not make any enquiries about the member’s mother despite having been advised of her existence and of the fact that she had received financial support from the member and his deceased spouse. The Tribunal said that the trustee at that time ought to have sought information in relation to the complainant to determine whether she 11
COMMUNICATIONS
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CUSTODY
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APPOINTMENTS
was a potential beneficiary. It said that while the trustee had determined the mother in law was a potential beneficiary of the deceased member because she was financially dependent on him, it had not considered whether his mother (the complainant) was a dependent. “In the view of the Tribunal, it was unfair and unreasonable for the trustee not to have sought information about the complainant, having been alerted to her existence and having been advised that there was a financial arrangement between herself and the deceased member,” it said. It said that the trustee’s decision not to consider the complainant as a potential beneficiary operated unfairly and unreasonably in relation to the complainant in the circumstances. SR 23
EVENTS
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