An Empirical Study of the Distribution of Superannuation Death Benefits

In Australia, if a superannuation member dies before retirement, they will leave superannuation death benefits that must be distributed. Death benefits are usually distributed at the discretion of the trustee or, on appeal, by the Australian Financial Complaints Authority (‘AFCA’). Analysis of the distribution of death benefits is exceedingly scarce in the literature. There is some practitioner commentary and case law, but it is not consistent on how this discretion is, or should be, exercised. General trust law holds that trustees exercise broad discretions and have duties to consider all relevant matters, including any non-binding nomination of beneficiaries by the deceased. Other evidence suggests that AFCA does not follow this approach. This article undertakes the first empirical examination of the distribution of death benefits by AFCA. Key findings are (1) there is no evidence that the deceased’s wishes expressed in non-binding nominations have any association with distribution outcomes; and (2) there is a very strong association between receiving a distribution and AFCA’s view that someone was financially dependent on the deceased.