Macquarie Adviser Services (Macquarie) has called for better solutions regarding binding nominations.
In response to the recommendations for changes to binding nominations made by the Cooper Review panel, Macquarie Executive Director, David Shirlow, said it was a step in the right direction, but fell short of an ‘optimal solution.’
The Cooper Review panel expressed concern regarding the potential for unintended consequences to arise if a member’s family circumstances changed due to a ‘life event’ between the time the member made a binding nomination and the time they died.
The panel took the view that, if superannuation law ensured that binding nominations became invalid if certain life events occur for the member, then binding nominations should remain valid for a longer period of five years, as opposed to the current three-year period.
Macquarie says this raises a number of questions about what life events should qualify and how they would be defined. It cites two examples in relation to divorce/separation, if this is one of the life events:
- How do you treat couples who permanently separate but do not divorce?
- How would you deal with separation of couples who are not legally married?
Mr Shirlow noted the Cooper panel suggested that the current approach taken under state and territory laws on will-making could be used as guidance for super law amendments.
But Mr Shirlow points out that will-making laws vary between states and territories, and if one imposed a national rule for super on life events, the question is how to ensure that the super treatment was going to be coherent with the treatment of a person’s will in a particular state or territory.
perhaps we should first be working towards national uniformity of state and territory will-making law before aligning national super law with that
“In theory, perhaps we should first be working towards national uniformity of state and territory will-making law before aligning national super law with that,” said Mr Shirlow, adding, “That would involve policymakers across the nation grappling with the question as to what life events should qualify, for example separation versus divorce, and agreeing on the answer.”
“If a life event occurs, the best way to ensure a super fund member’s super and non-super interests are dealt with in accordance with their wishes is for them to review both their super nomination and their will together so as to produce a co-ordinated result,” Mr Shirlow said.
