Treasury consults on binding nominations and kinship structures

Treasury is consulting on potential changes to superannuation binding death benefit nominations to reflect kinship structures.

The final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry noted that there are questions over if a binding death nomination can be made that reflects kinship structures.

Treasury said in its submission that nominations can be made in respect of people who have an interdependency relationship, though the final report said the “notion of an interdependency relationship is broad”.

While not making a recommendation, Commissioner Hayne said: “I urge consultation with relevant Aboriginal and Torres Strait Islander peoples about whether they, as the relevant users of the system, see difficulties about binding death benefit nominations that should be met.”

Treasury has now released a discussion paper which “explores the law surrounding the distribution of superannuation death benefits, Aboriginal and Torres Strait Islander peoples’ kinship structures, and how these kinship structures are accommodated elsewhere in the law”.

“The traditional social structure of Aboriginal and Torres Strait Islander communities is based around broader kinship systems that adopt a different definition of a ‘family’ compared with that of an ‘Anglo-Celtic’ system,” says Treasury, in the discussion paper.

“The ‘collectivist’ kinship system which is a characteristic of Aboriginal and Torres Strait Islander communities means that people think of themselves in terms of their affiliation with other people and their community. There are various kinship structures that are unique to each Aboriginal and Torres Strait Islander community. These define how individuals relate to each other in terms of their roles, responsibilities and obligations.”

A number of questions are asked in the discussion paper:

  1. How do the kinship structures of Aboriginal and Torres Strait Islander communities influence the preferred distribution of superannuation death benefits by these people?
  2. How do superannuation funds currently deal with kinship relationships?
  3. Are there case studies or examples where kinship structures are not appropriately considered by superannuation trustees when they are distributing superannuation death benefits?
  4. Do the kinship structures of Aboriginal and Torres Strait Islander communities mean these people have dependants that the current superannuation law does not recognise as dependants?
  5. How could the law that applies to superannuation death benefits take into account the kinship structures of Aboriginal and Torres Strait Islander communities?
    1. What information, guidance and/or support will superannuation trustees need to distribute a superannuation death benefit according to a kinship relationship?
    2. Are there other models in the law that would assist superannuation trustees to make death benefit distributions that reflect the kinship structures of Aboriginal and Torres Strait Islander communities?
  6. Do Aboriginal and Torres Strait Islander people have any difficulty accurately identifying relationships for the purpose of superannuation death benefit distributions?
  7. Are there differences in the barriers faced by Aboriginal and Torres Strait Islander women and men in making binding death benefit nominations?

Treasury says the Government will use responses to the discussion paper to decide what, if any, changes to the law are required.

Submissions in response to the discussion paper are open until 24 May 2019.

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