BT Financial Group says the release earlier this year of ASIC’s report into the claims handling processes by superannuation funds around death benefit payments has meant many advisers have been focussing on the death benefit nominations their clients have in place and the effectiveness of them.
The BT Technical team answers around 2,000 queries from advisers each quarter. Topics include legislative, regulatory and taxation issues, and superannuation related issues continue to be the most popular area of concern.
Bryan Ashenden, BT’s head of financial literacy and advocacy, said with the range of death benefit nominations available, it is important for advisers to understand the benefits and limitations of each option, so they can help guide their clients in making appropriate choices as part of their estate plans.
“It is necessary for a beneficiary to meet the definition of a superannuation dependant at the time of death which is crucial – not at the time of making the nomination,” he said.
“Regular reviews should be conducted, even for nominations that are non-lapsing, in case circumstances or wishes have changed, or an event has occurred to invalidate an existing nomination.”
He added that care should also be taken with binding reversionary pension nominations and the interplay with the proposed Division 296 tax as it could result in a higher tax liability under the proposed rules for the surviving spouse.
Data from BT Financial also revealed that with many superannuation thresholds indexing from 1 July 2025, advisers were focusing on assessing the retirement plans of clients.
“With the general transfer balance cap, and therefore the total super balance threshold, indexing from $1.9 million to $2 million from 1 July 2025, we received queries around the level of non-concessional contributions that could now be included in the current financial year,” Ashenden said.
“The answer is obviously dependent on each client’s situation, but many advisers weren’t factoring in the potential increased availability of non-concessional contribution from 1 July 2025, following total super balance indexation.”
Ashenden said this could mean a greater benefit for clients who thought they no longer had the opportunity to contribute.
“Another issue to be considered is the expectation we will see the non-concessional cap index from 1 July 2026, meaning decisions about triggering the bring-forward cap should potentially be delayed until later in the financial year when we have certainty whether the contribution caps will index or not.”
Although there have been changes proposed to the $3 million super tax legislation, and it still has to be passed by the Parliament, the topic continues to be a challenge for many advisers, Ashenden said.
“We would urge caution in withdrawing any excess amounts above $3 million at this time in the absence of the legislation, as clients would not be eligible to recontribute that amount if they changed their mind or if there were changes to the proposal itself.”
