Disputes over superannuation 

What is a death benefit?

The 'death benefit' is made up of the money held in the superannuation account plus any insurance payout.

Who is entitled to the death benefit?

If the member made a 'binding nomination', the superannuation fund will pay the death benefit to the beneficiaries chosen by the member. A binding nomination allows a member to choose who they want their death benefit to be paid to. Binding nominations expire every three years unless updated by the member.

If there was no binding nomination made by the member, the superannuation fund will make a decision to pay the 'death benefit' to either the:

• dependent
• interdependent, or
• estate.

A 'dependent' is the spouse, de facto partner (including same-sex partners), children (including adopted or step children) and any person who was financially supported by the deceased at the time of death.

An 'interdependent' relationship is where the person and the deceased had a close personal relationship, lived together and provided financial support, domestic support or personal care to each other at the time of death.

If the deceased did not make a binding nomination for the death benefit, the superannuation fund may decide to pay the benefit to the estate rather than to a dependent or interdependent. This means that the death benefit will form part of the deceased person's estate and the executor or administrator may need to apply for a grant.

Before the superannuation fund pays the death benefit, the fund will take into consideration the relationship of the beneficiary with the member as well as the financial needs of the beneficiary. If the beneficiary is under 18 years old, the superannuation fund may decide to pay the death benefit to the parent or guardian who is caring for the child or NSW Trustee & Guardian to be held in trust until the child reaches the age of 18.

​​​​​Directions about superannuation in a will

The superannuation death benefit does not automatically become part of a deceased person's estate which is distributed to beneficiaries according to a deceased person's will or the rules of intestacy.

The superannuation fund is required by law to pay the death benefit to the dependants, interdependent or the estate if there is no binding nomination and to the nominated beneficiaries, if there is a binding nomination.

For example, if the deceased person made a binding nomination of one child as beneficiary of the death benefit and also expressed in their will that the entire estate should go to another child, the superannuation fund will pay the death benefit according to the binding nomination, not the will.

Complaints about a superannuation payment

If the superannuation fund paid the death benefit to the wrong person or if you believe you are entitled to the death benefit then you must seek an internal review with the superannuation fund within 28 days of being notified.

You should explain the reasons why you believe the decision made by the superannuation fund was wrong and also provide supporting documents to prove your relationship with and/or dependency on the deceased.

If you are still not happy with the decision of the superannuation fund, then you may apply to the Australian Financial Complaints Authority (AFCA) within 28 days.

 Before you request an internal review, you should get legal advice to discuss your complaint.

 If the deceased had a self-managed superannuation fund, you should get legal advice.

Australian Financial Complaints Authority

From 1 November 2018, the Australian Financial Complaints Authority (AFCA) can handle complaints about regulated funds. AFCA cannot deal with complaints about self-managed funds.

Before you lodge a complaint with the AFCA, you should check the type of fund the deceased was a member of. If you are not sure, you should contact the fund and ask them.

It is important that you try to resolve your dispute directly with the fund before lodging your complaint with AFCA.

After you lodge your complaint and supporting documents with AFCA, AFCA will let the fund know and ask them to respond to the complaint. Usually AFCA will try to mediate first.

If that does not work, AFCA will make a decision and let you know in writing.

 You may appeal the decision of the tribunal to the Federal Court within 28 days of the decision, on limited grounds. Before lodging an appeal, you should get legal advice.

For more information or to lodge a complaint, go to the AFCA website.