Many of us know that losing a loved one is one of the most stressful things a person can experience in their lifetime. Bereavement can leave us vulnerable and even unable to deal with the usual administrative burden of life.
Your role, as superfund professionals will often mean that you are one of the first points of call for an Australian who has lost a loved one. So as an industry, we must ensure that we are providing those beneficiaries with the communication, support and empathy that they need and deserve.
ASFA has spent a significant amount of time working closely with its members to identify what can be done, from a practice and policy perspective, to lift the consumer experience of death benefit claims. This has culminated in the release of two documents, an ASFA Guidance Note on Death Benefit Payments (the Guidance) and complementary Policy Proposals to support improved consumer outcomes.
These initiatives have benefited from the invaluable leadership of Jocelyn Furlan, former Chairperson of the Superannuation Complaints Tribunal. Jocelyn has chaired ASFA’s Steering and Working Groups on these important issues, guiding the development of practical and effective solutions.
The Guidance sets out recommended procedures to ensure that superannuation fund members receive disclosures and communications that enable and empower them to make decisions around how their death benefit is to be distributed; and, upon the death of a member, to ensure that appropriate and timely services are provided to potential beneficiaries as benefit payments are processed.
The Policy Proposals are designed to improve the efficiency of death benefit nomination and payment processes and ensure there are no unintended consequences for members and beneficiaries.
ASFA Guidance Note on Death Benefit Payments
The Guidance sets out good practice for how superannuation funds communicate and provide service to potential beneficiaries throughout a death benefit claim process. It’s about giving Australians peace of mind when they need it most.
The death benefits process should feel supportive, not overwhelming.
The Guidance emphasises the need for clear, regular communication to ensure people are informed and supported while the claim process is afoot. Central to this is transparency; requiring potential beneficiaries to be kept informed regarding the status of the claim and what the next steps are in the trustees’ process for determining the distribution of the benefit.
The Guidance provides for additional support where required, including specific practices for handling claims involving vulnerable beneficiaries, to ensure that care and empathy guide the process and appropriate assistance is provided throughout.
Importantly, the Guidance also outlines some key elements of the death benefit payment process including the types of payments, considerations for trustees in determining distributions, and factors that can increase complexity and extend timeframes. Some death benefit payments can require complex decision-making and investigation by trustees to make appropriate distributions in the interests of beneficiaries, and it is important to increase understanding of this amongst stakeholders.
Policy Proposals on Death Benefit Payments
The Policy Proposals recommend several reforms aimed at streamlining the death benefit claims process and empowering members with greater choice and control over how their benefits are distributed.
One key recommendation is the introduction of electronic signing and witnessing of binding death benefit nominations (BDBNs) and renewals, allowing members to easily update their nominations at any time.
Allowing members to update their nominations securely and efficiently — without unnecessary paperwork, delays, and uncertainty — is a key step towards a more effective, compassionate system for death benefits.
The proposals also encourage greater collaboration between government agencies and superannuation funds to help locate beneficiaries, particularly in cases where communication is difficult, such as in remote areas or among First Nations communities.
We also propose amendments to enable a person in a kinship relationship with a First Nations person to be recognised as a dependant when paying a superannuation death benefit. The kinship structures that bind First Nations communities together can be complex and may not be adequately reflected in superannuation legislation.
In addition, we recommend the legal and regulatory framework should prevent people who have been convicted of crimes such as abuse, assault, and family violence from claiming their victims’ death benefit. Under existing laws, a perpetrator can receive their victim’s benefit unless they are the direct cause of that person’s death.
These reforms reflect the super sector’s commitment to leading on innovation and efficiency, ensuring that even in challenging times, Australians can count on a system that works for them and their loved ones.
Our sector is committed to continuously improving our processes so that superannuation remains a trusted and reliable cornerstone of Australia’s world-class retirement system. Access the full ASFA Guidance Note on Death Benefit Payments and Policy Proposals on Death Benefit Payments here
