Superannuation binding death benefit nominations and kinship structures

The Financial Services Royal Commission suggested that the Government explore, in consultation with relevant Aboriginal and Torres Strait Islander peoples, difficulties they face making binding death benefit nominations.  One suggestion given in evidence was that the definition of ‘dependant’ should be expanded in a way that accommodates the kinship structures operating in Aboriginal and Torres Strait Islander communities.

Treasury has 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.

Binding and non-binding death benefit nominations can only be made to the deceased’s legal representative or dependant under superannuation law. A reversionary beneficiary must be a
dependant under superannuation law.

Definitions of dependency also have implications for the tax treatment of superannuation death benefits.

The use of these definitions may result in people who are considered to be dependants within Aboriginal and Torres Strait Islander kinship structures not being, or encountering difficulties being, recognised as dependants for the purpose of superannuation death benefit distributions.

In NSW there are specific provisions relating to the application for distribution of Indigenous persons’ estates. This involves allowing the personal representative of an Indigenous intestate, or a person claiming to be entitled to share in an intestate estate under the laws, customs, traditions and practices of the Indigenous community or group to which an Indigenous intestate belonged, to apply to the court for an order for distribution of the intestate estate.

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.

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.

The Financial Services Royal Commission also heard about several other issues faced by Aboriginal and Torres Strait Islander people in accessing their superannuation, such as satisfying the identification requirements of superannuation funds and some funds not offering the early release of superannuation on severe financial hardship grounds.

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