SCT Quarterly - Q4 2018

Chairperson's welcome

Welcome to SCT Quarterly.

It's been a big quarter for the Superannuation Complaints Tribunal, and for the superannuation industry as a whole, with the continuation of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and the Productivity Commission’s Inquiry into Superannuation (for which the final report was publicly released this month).

The Tribunal accepted its last complaint on 31 October 2018, after the biggest month of complaints received in our history (a 47% increase on the month prior, and a 76% increase on October 2017). We have completed the shift from being the external dispute resolution scheme for superannuation complaints, and now continue to operate to resolve our existing complaints.

On 1 November, the Australian Financial Complaints Authority (AFCA) started accepting complaints. The transition has gone well, however we are still occasionally receiving complaints from fund members. We encourage all trustees to check that their internal dispute resolution communications list AFCA as the escalation point for disputes.

This is the last edition of SCT Quarterly that will include statistics about complaints received. From here on in, we will focus on complaints resolved and the steps we are taking to resolve the remaining complaints. In this edition, we shine a spotlight on the distribution of death benefits, which continues to be our largest single complaint category. You can read more about death benefits in our focus section below.

We are pleased to announce that, in Q4, the Assistant Treasurer appointed and reappointed members to the Tribunal. We would like to welcome former Tribunal Chairperson Jocelyn Furlan and former Tribunal member Pamela McAlister back to the Tribunal as part time members, and congratulate them on their appointments. We also congratulate Stephen Duffield, Amanda MacDonald, Justin Malbon, Beth McConnell and Lynda Purcell on their re-appointments, while saying farewell to Noel Davis and Hayley Pope, who have resigned from the Tribunal. We thank you both for your invaluable contributions to the Tribunal, and wish you well in your future endeavours. You can read about our members on our website here.

In Q4, we also welcomed new staff to the Tribunal and rolled out a comprehensive training program. This affected complaint resolution rates (as expected), as existing staff created and delivered the training program and continued to offer on-the-job training. We expect to see the benefits of the increase in Tribunal staff on complaint resolution rates in coming quarters.

We hope you enjoy this edition of SCT Quarterly. If you have any feedback, suggestions or queries, please send them through to us at info@sct.gov.au.

Helen Davis, Chairperson

 

Q4 2018 focus: death benefit complaints

The distribution of death benefits has been the Tribunal’s largest single complaint category almost since inception.

This quarter, the percentage of complaints resolved in this category rose (32.4% this quarter; 24.4% in Q3). While that is noteworthy, it’s important to note that this has been influenced by a targeted approach to death benefit complaints, and the prioritisation of complaints with a potential anti-detriment payment in particular.

Death benefit trends: resolution of complaints

We noted that a complainant’s lack of familiarity with the role of superannuation often impacts on the complaints in the Q1 2017 edition of SCT Quarterly. ‘It is often not well understood that superannuation does not automatically form part of a deceased member’s estate.’ This remains true, and we see this play out in the statistics about the stage of resolution.

In Q4 2018, the majority of death benefit distribution complaints were resolved following a conciliation conference (32.2% of all resolved death benefit complaints). This is generally for one of two reasons: an agreement is reached by the parties to a complaint; or, the complainant may better understand why the trustee has decided to distribute the benefit a particular way, and withdraw a complaint.

22.8% of all resolved death benefit complaints in Q4 2018 were resolved with a determination by the Tribunal, and in 70.6% of these determinations the Tribunal affirmed the decision of the trustee.

Complaint priorities: anti-detriment payments

In the Q1 2018 edition of SCT Quarterly, we wrote about the work we were doing to prioritise death benefit complaints that were potentially eligible for an anti-detriment payment. .Superannuation funds may claim a deduction for an anti-detriment payment as part of a death benefit if a fund member has died on or before 30 June 2017 and the benefit has been paid by 30 June 2019. We were still receiving complaints about death benefits with an anti-detriment component on 31 October 2018, our last day of accepting complaints.

Of the 149 death benefit distribution complaints finalised in Q4 2018, 90 (60.4%) of them had a potential anti-detriment payment.

 

SCT by the numbers Q4 2018

In Q4 2018, we resolved 460 complaints, a decrease of 10.2% on Q3. (This decrease was expected: please see the Chairperson’s welcome for more information.)

Types of complaints resolved Q4 2018 - top ten

Type of complaint Percentage
Death benefit distribution 32.4
Deduction of insurance premiums 6.3
Fees and charges 5.9
Account balance 4.3
TPD benefit - declined on medical evidence 3.9
TPD benefit - amount in dispute 2.8
TPD benefit - delay in making a decision 2.6
TTD benefit - delay in making a decision 2.4
Death benefit - insurance cover in dispute 2.4
Administration error 2.2
Preservation issues 2.2
TTD benefit - declined on medical evidence 2.2

 

14.1% of the complaints were finalised at review stage (in other words, with a determination by the Tribunal). The remaining 85.9% of the complaints were finalised and/or resolved by our staff at various stages of the complaints process.

35.4% of finalised complaints were found to be out of jurisdiction. 18% of finalised complaints were withdrawn by the Tribunal, and 32.4% were withdrawn by the complainant.

In Q4 2018, we received 343 complaints. (We received our last complaint on 31 October 2018.)

Types of complaints received Q4 2018 - top ten (October only)

Type of complaint Percentage
Death benefit distribution 19.2
Deduction of insurance premiums 13.7
Fees and charges 10.2
Account balance 7.3
TPD benefit - declined on medical evidence 4.7
TTD benefit - amount in dispute 2.9
Death benefit - delay in making a decision 2.6
Insurance cover in dispute 2.6
Delay in transfer of benefit 2.3
Incorrect application of contributions 2.3

 

In Q4 2018, SCT received a further 7,321 enquiries by telephone and email, an increase of 10.6% on Q3. (This followed increases of 9.3% in Q3 and 6.8% in Q2.)

 

Case study 1: Dependence? It depends

Full determination available here: D18-19\031 [2018] SCTA 165 (11 September 2018)

Background: The deceased member was 59 years old at the date of death. He had three adult children, and was in a de facto relationship with the spouse, with whom he cared for a minor stepdaughter.

The trustee decided to pay the entire death benefit arising on the death of the deceased member to the spouse.

Complaint: The elder daughter of the deceased member brought a complaint to the Tribunal, stating that the spouse was not financially dependent on the deceased member and seeking for the death benefit to be divided equally between the spouse and the three adult children.

She claimed that it was the deceased member’s wish that his children receive financial support when he died. She also claimed that the son was nominated as the beneficiary for the death benefit and was partially financially dependent on the deceased member, often residing with the deceased member due to the fly-in fly-out nature of his work.

Further details: The other adult children of the deceased member joined the elder daughter’s complaint and supported her contention. The son advised that the deceased member provided him and his family with accommodation as part of an ongoing arrangement, and that they had been staying with the deceased member along with the spouse and stepdaughter at the time of the death of the deceased member, and had been there for six weeks.

The trustee stated that the deceased member and the spouse were in a relationship and living together at the date of his death. The trustee advised that the daughters had confirmed that they were not financially dependent on the deceased member at the time of death, and the son had not provided sufficient evidence to support his claim of financial dependence.

The spouse advised that she had been in a relationship with the deceased member for more than seven years and that they lived together, had a sexual relationship, and were fully committed to each other, sharing the care of the stepdaughter. She stated that the deceased member supported her financially, emotionally and physically, and the stepdaughter supported these statements.

Decision: The Tribunal agreed with the trustee’s view that a parent providing temporary accommodation to an adult child does not necessarily mean that the child is financially dependent. The Tribunal determined that the spouse and the stepdaughter lived as a family with the deceased member, and that the spouse and the stepdaughter were the only potential beneficiaries who had an expectation of ongoing financial support had the deceased member not died.

The Tribunal affirmed the decision of the trustee.

 

Case study 2: Claim of invalid claim withdrawal

Full determination available here: D18-19\034 [2018] SCTA 167 (11 September 2018)

Background: The deceased member was 54 years old at the time of his unexpected death, and was survived by three children and his wife. The youngest son and the wife both lodged claims with the trustee for payment of the death benefit. As the trustee was processing the claims, it received a telephone call from someone purporting to be the youngest son, requesting that his claim for the benefit be withdrawn.

The trustee withdrew the youngest son’s claim for the benefit and paid 100% of the benefit to the wife. The youngest son discovered that the payment had been made to the wife when his sister received letters of administration and proceeded to deal with the deceased member’s estate.

Complaint: The youngest son brought a complaint to the Tribunal, stating that he had not made the withdrawal call. He claimed that the trustee had failed to verify the identity of the caller, and that he had received no communication about the trustee’s withdrawal of his claim or of the final payment decision. He stated that his claim should not have been withdrawn.

The youngest son had not been advised of the final decision. The Tribunal therefore accepted the complaint outside of the usual 28-day time limit as the trustee was aware of the youngest son and should have advised him of the decision even if it was of the view that he had withdrawn his claim for the benefit.

The youngest son submitted that he was the only true dependent of the deceased member at the time of his death. He advised that he had been living with, and was financially dependent upon, his father, and had been for much of his life due to an intellectual disability. He also advised that the wife had not been living with the deceased member, and that they had separated prior to his death.

Further details: The trustee stated that the fund accepts verbal instructions to withdraw death benefit claims, and that such calls go through a security identification process. This process requires callers to identify themselves by name and to confirm any of the following details of the deceased member: membership number; name; address; date of birth.

The trustee advised that it could not conclude whether the youngest son was fraudulently impersonated after reviewing the withdrawal call. The trustee also advised that the benefit was paid to the wife on the basis that she met the definition of dependant, and that the youngest son had lived with the deceased only for a short time, which the trustee considered to be a temporary living arrangement.

The wife chose not to join the complaint.

Decision: The Tribunal determined that the trustee had failed to establish or verify the identity of the person who made the withdrawal call, and that the youngest son’s benefit claim had therefore not been validly withdrawn. The Tribunal also determined that as at the date of death, the youngest son was financially dependent on the deceased member, and had a right to look to the deceased member for financial support on an ongoing basis had he not died.

The Tribunal set aside the decisions of the trustee and substituted the decisions that the withdrawal of the benefit claim be reversed, and that the trustee compromise the youngest son’s claim in the amount of 50% of the benefit with interest.

 

Case study 3: Minor benefit for minor children

Full determination available here: D18-19\064 [2018] SCTA 197 (17 October 2018)

Background: The deceased member was 57 years old at the date of death. He was married, and had two adult children with his former wife and three minor children with a former partner.

The trustee decided to pay the benefit as follows:

  • 70% to the wife
  • 10% to the former partner for the care of the deceased member’s second daughter
  • 10% to the former partner for the care of the deceased member’s third daughter
  • 10% to the former partner for the care of the deceased member’s youngest son.

Complaint: The former partner brought complaints to the Tribunal on behalf of each of the three minor children, seeking 25-30% of the benefit to be distributed to each of the minor children. She stated that the deceased member had loved his children, maintaining child support payments and contributing to schooling, dental and optical expenses. She noted that the entire death benefit was less than they would have expected to receive in child support alone had the deceased member not died.

During the course of the complaint, the former partner joined the complaint in her own right, seeking part of the benefit as a financial dependant, stating that she was financially dependent on the deceased member for the same reasons as the minor children.

Further details: The trustee maintained its original position, stating that the deceased member had left his estate to his wife and that the distribution decision provided for the minor children as financial dependents and the wife as a dependant.

The wife, when applying for the benefit from the trustee, had answered ‘no’ to the questions ‘Were you wholly or partially financially dependent on the deceased member?’ and ‘Was the member wholly or partially financially dependent on you?’ The wife also advised that she had paid a sum of $30,000 to the deceased member’s eldest (adult) daughter to be held in a long term deposit and distributed to each of the minor children after the age of 18.

Decision: The Tribunal determined that the former partner did not qualify as a dependant in her own right. The Tribunal also determined that the wife, though a dependant, was not financially dependent on the member at the time of his death.

The Tribunal set aside the decision of the trustee and substituted the decision that the trustee pay the benefit as follows:

  • 25% to the wife as a dependant
  • 30% to the former partner for the benefit, education and maintenance of the deceased member’s youngest son as a dependant
  • 25% to the former partner for the benefit, education and maintenance of the deceased member’s third daughter as a dependant
  • 20% to the former partner for the benefit, education and maintenance of the deceased member’s second daughter as a dependant.

 

Feedback and contact us

We are constantly seeking to improve our services and the information we provide to consumers, trustees and industry, and we need your feedback to do it.

If you have any feedback on this edition of SCT Quarterly, or any queries or suggestions, please email info@sct.gov.au with 'SCT Quarterly - Q4 2018' in the subject line.

Superannuation Complaints Tribunal
Melbourne VIC 3000

1300 884 114
http://www.sct.gov.au/
info@sct.gov.au