Australia’s three super bodies have called on the federal government to introduce law reforms that stop family violence perpetrators from receiving their victim’s death benefit payment.
In a joint initiative between the Super Members Council (SMC) and the Association of Superannuation Funds of Australia (ASFA), alongside not-for-profit Women in Super (WIS), the organisations have urged Minister for Financial Services Stephen Jones and other key ministers to put in laws that will allow trustees more legal power to fend off abusers’ claims.
At the moment, a super fund’s decision on who can receive a member’s death benefit depends on whether that member has made a binding death benefit nomination, a non-binding nomination, or has done nothing.
Where members have made a binding nomination, “the trustees’ hands are generally tied and they have to pay the death benefit to the nominated beneficiary,” said Gilbert + Tobin partner Luke Barrett, who specialises in superannuation law. But in the latter two scenarios, trustees have some room for discretion.
The “forfeiture rule” currently blocks a perpetrator from receiving their victim’s super if they are the direct cause of death, but does not apply if the perpetrator only has a previous conviction for family violence offence, or if their systemic abuse indirectly contributes to the victim’s death.
SMC chief executive Misha Schubert called this a “legal loophole”, and SMC, ASFA, and WIS said the situation needs to change.
“A perpetrator getting their victim’s super death benefit is an extension of the abuse, and the super sector has come together to call for urgent reform,” Schubert said.
The organisations proposed two approaches to reforms: expanding the “forfeiture rule” to cover family violence-related crimes; or giving super funds legislated power to withhold death benefits in substantiated cases of family violence.
The latter approach would need clear standards of evidence, and be determined by an independent body such as a court.
Potential complications
In terms of beneficiaries, members usually have the choice to leave their super to their estate or dependents. A dependent can be a spouse, a child of any age, or someone the member shares an “interdependency relationship” with, such as a person with a disability or someone with whom they share personal, financial, and domestic care.
This is important, as Barrett noted that family violence not only occurs between spouses, but also between children (including those who are adults) and parents.
“If this proposal was enacted, it would possibly apply to the situation where the would-be recipient of the death benefit is a child or an adult child, who has perpetrated domestic violence against their parent who has since deceased,” Barratt said.
Another related issue is that if the recipient of a member’s death benefit is a young child, then guardrails need to be set as to who can hold the benefit on that child’s behalf, Barrett said.
While the other parent would usually be the best option, in cases where there is spousal domestic violence prior to the member’s death, they might not be an appropriate person, he said.
Super funds are already under pressure from regulators and politicians due to delays in death benefit payments, but Barrett doesn’t foresee the reform adding to that stress.
“This proposal wouldn’t delay things in cases where there’s no suggestion of any violence,” he said.
“If this reform was enacted, in cases where there was a question of whether domestic violence had occurred, the extra time would be taken, and it would be right that that extra time is taken to get the decision right.
“There are people who work at super funds that invest a lot of time and effort into paying death benefits to the right recipients in the right proportions, and the policy of this proposal would be welcomed.”
