Superannuation Disputes FAQ

Employers must pay a minimum percentage of an employee's ordinary time earnings into a complying superannuation fund. The rate is 12% from 1 July 2025 (rising from 11.5% in 2024-25). The SGA applies to employees aged 18 and over (and under 18 if working more than 30 hours per week).

Report unpaid super to the ATO. The ATO can investigate and issue a superannuation guarantee charge (SGC) to the employer, which includes the unpaid super, a nominal interest component, and an administration fee. Employers who fail to pay the SGC face penalties and potential director penalty notices.

The Australian Financial Complaints Authority is the external dispute resolution scheme for financial services, including superannuation. Members can complain about fund decisions on claims (TPD, income protection, death benefits), account administration, insurance within super, and investment switching. AFCA's determinations are binding on the fund.

First, lodge an internal complaint with your super fund, which must respond within 45 days (or 90 days for death benefit distribution disputes). If unsatisfied, lodge a complaint with AFCA within 2 years of the fund's final response. AFCA considers the matter and can make a binding determination.

A TPD claim is made when a member becomes totally and permanently disabled and cannot work in their own or any occupation (depending on the policy definition). The fund's insurer assesses the claim based on medical evidence. If approved, a lump sum is paid into the member's super account for release.

Common reasons include insufficient medical evidence that the disability is permanent, the member not meeting the policy definition (particularly the "any occupation" test), pre-existing condition exclusions, non-disclosure on the insurance application, and the member returning to some form of work during the assessment period.

Many super funds include income protection insurance that pays a monthly benefit (typically 75% of pre-disability income) during periods of total or partial disability due to illness or injury. Claims are assessed by the fund's insurer against the policy terms. Waiting periods of 30-90 days typically apply.

A written direction by a member specifying who should receive their super death benefit. A valid binding nomination must be in writing, signed by two witnesses who are not beneficiaries, and renewed every 3 years (unless the fund allows non-lapsing binding nominations). The trustee must follow a valid binding nomination.

Death benefits can only be paid to dependants (spouse, children, financial dependants, persons in an interdependency relationship) or the member's legal personal representative (estate). If there is no valid binding nomination, the trustee exercises discretion in distributing between eligible beneficiaries.

Yes. If the trustee exercises discretion (no valid binding nomination), any person claiming to be a beneficiary can object. The first step is an internal complaint to the fund. If unsatisfied, complain to AFCA, which can review the trustee's decision and substitute its own. AFCA considers the member's wishes, dependants' needs, and the fund's trust deed.

Super is generally preserved until retirement after reaching preservation age (60 for those born after 1 July 1964). Early release is available on compassionate grounds (approved by the ATO for medical treatment, mortgage hardship, or funeral expenses), severe financial hardship, terminal illness, or total and permanent disability.

An SMSF is a super fund with fewer than 7 members where all members are trustees (or directors of a corporate trustee). Members manage their own investments. SMSFs are regulated by the ATO and must comply with the SIS Act, including the sole purpose test, investment restrictions, and annual audit requirements.

Common issues include lending to members or relatives (illegal), using fund assets for personal benefit, failing to maintain the fund as a separate entity, not having an investment strategy, borrowing outside the limited recourse arrangement rules, late lodgement of annual returns, and failing to have the fund audited annually.

The ATO can issue a rectification direction, make the fund non-complying (taxed at 45%), issue administrative penalties to trustees, disqualify trustees, or refer serious matters for prosecution. Contraventions of the sole purpose test or the lending provisions are treated particularly seriously.

An SMSF must be maintained for the sole purpose of providing retirement benefits to members or death benefits to dependants. Using fund assets for current benefit (such as living in a fund-owned property or lending money to members) breaches the sole purpose test and can result in severe penalties.

Yes. Superannuation is treated as property for family law purposes. The Family Court or Federal Circuit and Family Court can make splitting orders that divide super between the parties. The member's super benefit is reduced and an amount is rolled over or paid to the non-member spouse's fund.

Most industry and retail super funds include default insurance cover for life, TPD, and sometimes income protection. Premiums are deducted from the member's account balance. Cover may be reduced or cancelled for inactive accounts (no contributions for 16 months) under the Protecting Your Super legislation.

Trustees must act honestly, exercise skill and diligence, act in the best financial interests of members, keep assets separate, not enter into contracts that would prevent the fund from being wound up, and comply with the SIS Act and the fund's trust deed. These duties are non-delegable for investment decisions.

A member can only access preserved super when a condition of release is met. Key conditions include: reaching preservation age and retiring, reaching age 65, death, terminal illness, permanent incapacity, compassionate grounds, severe financial hardship, and temporary residents departing Australia permanently.

AFCA complaints are free for members. If the matter escalates to court (for example, challenging a binding nomination's validity), costs can range from $10,000 to $100,000+. Some law firms offer no-win no-fee arrangements for TPD claims. Internal dispute resolution with the fund is also free.