Hot topics at the Superannuation Complaints Tribunal

Transcription

1 Hot topics at the Superannuation Complaints Tribunal

2 Topic? a) Death Benefits Outside jurisdiction? Binding death benefit nominations? b) Administration c) TPD *****

3 Case study: Death benefit - outside jurisdiction The complainant (the deceased member s father) lodged a complaint with the Tribunal regarding the trustee s decision to pay the benefit to the mother as an interdependent As the complaint was not lodged within the prescribed 28 day period, the Tribunal determined that under subsections 14(3) and 14(4) of the Complaints Act, it did not have jurisdiction to deal with the complaint.

4 The complainant and the mother are the parents of the deceased member On 5 January 2009, the complainant lodged a complaint with the Tribunal (dated 23 December 2009) that the decision to pay the whole of the death benefit to the mother as an interdependent was unfair and unreasonable The resolution sought by the complainant was that the benefit be split equally between them Subsections 14(3) and 14(4) of the Complaints Act states that the Tribunal cannot deal with a complaint under section 14 about a decision of a trustee relating to the payment of a death benefit if the complaint is not lodged within the prescribed period The prescribed period is 28 days after the person has been given written notice of the trustee s decision

5 The trustee wrote to the complainant and the mother on 21 August 2008 advising that it proposed to pay the benefit to the mother as an interdependent By letter dated 11 September 2008, the complainant s representatives advised the trustee that they acted for the complainant and that they objected to the proposed payment of the benefit On 17 September, the trustee wrote to the complainant s representative seeking further information which was provided by the representative on 26 September By letter dated 13 October, the trustee gave notice that it affirmed its original decision. Not having received any further objections, the trustee paid the benefit to the mother on 24 November 2008 The complainant s complaint was lodged on 5 January 2009 outside the prescribed 28 days.

6 The issue in dispute was whether the complainant s representative had received the letter Section 29 of the Acts Interpretation Act 1901 deals with the meaning of service by post and states: Where an Act authorises or requires any document to be served by post then unless the contrary intention appears the service shall be deemed to be effected by properly addressing, prepaying and posting the document as a letter, and unless the contrary is proved to have been effected at the time at which the letter would be delivered in the ordinary course of post. In other words, if the letter was properly addressed, stamped and posted then it is deemed to have been delivered unless the contrary can be proved

7 The complainant s representative submitted that the contrary should be considered to have occurred because the trustee did not have a procedure for recording outgoing mail and the representative did have a procedure for recording incoming mail, and there was no record of receipt of the letter However, the letter was correctly addressed, as evidenced by a copy of the letter which was ed to the representative on 10 December 2008; and an identically addressed letter dated 17 September 2008 was received by the complainant s representative The letter dated 13 October 2008 was not returned to the trustee, as would have been likely to have occurred had the letter not been delivered Also, the Tribunal was satisfied that the mother had received her copy of the letter

8 On balance, the Tribunal was not persuaded that the deemed delivery should be rebutted and, accordingly, the letter of 13 October was deemed to have been delivered on or about 16 October 2008 The complainant s complaint of 5 January 2009 was therefore received outside the prescribed time and, consequently, was outside the Tribunal s jurisdiction In reaching its determination, the Tribunal observed that a simple way for trustees to avoid this type of complaint was to send all notices relating to disputed death benefit distributions to potential beneficiaries by registered mail. As the prescribed period of 28 days is calculated from the date of receipt of the notice, there will be probative evidence to support the receipt date of the notices. (D10-11\067)

9 Case study: Binding death benefit nomination The de facto spouse of a deceased member complained about the decision of the trustee to treat a nomination of beneficiaries made by the deceased member as a non-binding nomination On 25 January 2007 the deceased member completed a nomination of beneficiaries form The nomination form included the following statement: Please note: Witnesses must witness at the same time and on the same date as this form is signed. If these dates are not the same or are not provided, the nomination will not be valid.

10 The deceased member and two eligible witnesses completed and signed the form. The witnesses dated the form 25 January 2007 but the deceased member inserted his date of birth instead of the date of making the nomination The trustee wrote to the deceased member on 1 February 2007 and advised him that his nomination form was not valid and could only be processed as a non-binding nomination A new nomination form and a reply paid envelope were enclosed with the letter with a request that the form be completed and returned to the trustee

11 The deceased member did not complete the form. He made a Will on 2 March 2008 which purported to leave his superannuation to his sons, and he died on 1 April 2008 The trustee advised the complainant that it had decided to pay the death benefit to the deceased member s legal personal representative The Tribunal observed that the nomination form was incorrectly dated by the deceased member and agreed with the trustee that this made the form invalid as a binding death nomination. (D09-10\052)

12 Case study: Administration The complainant's defined benefit account had commenced in 1978 and his membership of the fund in He was made redundant on 12 October 2008 and as he had satisfied a condition of release, his defined benefit crystallised Following his retirement, the complainant contacted the trustee to rollover his crystallised benefit to another fund He was advised that he would have to wait receipt by the fund of his final employer contribution He also had a small accumulation account, invested in the growth investment option

13 The complainant believed that his defined benefit would be held uninvested until rollover and he continued to receive periodic statements and website information that re-assured him that was the case In his rollover benefit statement and exit statement he discovered that his defined benefit had been treated by the trustee as held in his existing separate accumulation account and invested in the growth investment option, between the date of his retirement and the date of rollover During this period the defined benefit amount was reduced through negative investment returns

14 The complainant lodged a complaint with the trustee alleging action was taken without his consent or authority and requested that the negative returns be reversed. The trustee rejected his complaint The trustee stated that the process of applying investment earnings based upon the member's investment choice had been consistently applied to all defined benefit members The trustee contended that to freeze a defined benefit until finalisation would place the investment risk with other members

15 There was no evidence that the complainant was told of the policy of transferring a defined benefit into an accumulation account There was no rationale for the trustee s claim that treating a sum as uninvested pending payment to the member could prejudice other members The fund website continued to reflect that the defined benefit was intact The defined benefit amount was significantly higher than the existing accumulation account balance so to presume that, without authorisation, a member would make the same investment choice for the larger amount was not reasonable

16 The Tribunal affirmed that the complainant was entitled to receive the amount of his defined benefit at rollover without adjustment by investment earnings between the date of retirement and the date of rollover The Tribunal further considered that as, due to the trustee's refusal to compromise his claim, the complainant lost the benefit of the additional amount due to him, he should receive interest representing the earnings which would have accrued on that sum after the date of rollover. (D10-11\047)

17 Case study Total and permanent disability (TPD) Mr Edington commenced employment with the Queensland Department of Primary Industries in the Fire Ant Eradication Department in September 2001 and joined QSuper He applied for 13 additional units of cover in December 2001 He did not disclose that he had a pre existing condition of schizophrenia, but under the rules of the fund he was not required to do so. He had been diagnosed with schizophrenia in 1994 In January 2002, he entered a property to inspect it for fire ants. While on the property, he thought that two Rottweiler dogs were attacking him. To escape the dogs, he ran to the front gate and jumped over it. In the process he fell and injured his back and his right foot. The dogs were tethered.

18 Mr. Edington subsequently claimed to have suffered an injury to his right foot and either post traumatic stress disorder (PTSD) or an anxiety disorder as a result of the incident The QSuper Trust Deed provided as follows: 6.2(c) No insurance benefit will be paid for a claim unless: (i) (ii) (iii) The member has been an insured member for fewer than 10 continuous years; and the member did not lodge a personal medical statement at or about the date on which the member became an insured member; and it is established to the satisfaction of the board that the total and permanent disablement was not related to a condition that ought reasonably to have been disclosed had a personal medical statement been submitted

19 The trustee considered the member s total and permanent disability claim (TPD) and determined that: He was TPD under QSuper s governing rules However, the cause of his TPD was related to his pre-existing condition As a consequence, he was not entitled to a TPD benefit The trustee therefore declined the claim Mr Edington complained to the Tribunal On its review of the evidence, the Tribunal affirmed the operation of the trustee s decision as fair and reasonable in the circumstances.

20 Mr Edington appealed the Tribunal s determination to the Federal Court The Federal Court affirmed the Tribunal s decision and dismissed the appeal (Edington v Superannuation Complaints Tribunal [2007] FCA 1989) On appeal to the Full Federal court, the court allowed the appeal by consent and remitted the matter to the trustee (Edington v Superannuation Complaints Tribunal [2008] FCA 78) The trustee reconsidered Mr. Edington s claim and again rejected it on the basis that the condition rendering him TPD was related to his pre-existing schizophrenia Mr. Edington again complained to the Tribunal and the Tribunal again affirmed the trustee s decision

21 In so doing, the Tribunal referred to DSMIV criteria for PTSD and conducted its own analysis of the medical evidence Mr Edington (again) appealed the Tribunal s determination to the Federal Court The Federal Court set aside the Tribunal's decision and remitted the matter to the Tribunal for reconsideration as follows: The Tribunal affirmed the trustee's decision to decline Mr Edington's TPD claim but for different reasons. The Tribunal therefore conducted a fresh review of the matter and this constituted an error of law To follow proper process the Tribunal should: 1. Identify the trustee's reasoning process 2. Analyse the reasoning process to assess whether fair and reasonable The trustee appealed to the Full Federal Court

22 On appeal, the Full Federal Court set aside the first instance decision It found that the Tribunal had properly conducted its review of the decision of the Board of Trustees in accordance with s37 of the Superannuation (Resolution of Complaints) Act 1993 The role of the Tribunal is to undertake a fresh hearing for the purpose of determining for itself whether the decision of the trustees was fair and reasonable. The Tribunal was required to undertake its own assessment of the evidence and information before it The correct test is whether the actual decision, rather than the process that led to it, was fair and reasonable [para. 46] The Tribunal is not required to focus on the reasoning process underlying the trustee s decision.

23 Thus, even if the Tribunal s factual findings differed from those of the previous decision-maker, the Tribunal might nonetheless be satisfied that, in the circumstances, the decision under review was in fact fair and reasonable in the relevant way. The court confirmed that the Tribunal is not limited in its review to the material which was before the trustee or, as the case may be, the insurer [para. 78] the Tribunal, with great respect, exercises a very peculiar form of external merits review indeed. [para. 85] Board of Trustees of the State Public Sector Superannuation Scheme v Edington [2011] FCAFC 8

24 Questions? A community better informed about superannuation