Revised Explanatory Memorandum
(Circulated by the authority of the Minister for Financial Services and Superannuation, the Hon Bill Shorten MP)Chapter 3 - Reasons for decisions and Superannuation Complaints Tribunal time limits
Outline of chapter
3.1 Schedule 1 to this Bill amends the SIS Act to require superannuation trustees to provide eligible persons, generally on request, with the reasons for decisions made in relation to a complaint.
3.2 The Superannuation (Resolution of Complaints) Act 1993 (SRC Act) is amended to increase the time limits within which beneficiaries can lodge complaints with the Superannuation Complaints Tribunal (SCT) regarding total and permanent disability (TPD) claims.
3.3 All legislative references in this chapter are to the SIS Act unless otherwise stated.
Context of amendments
3.4 The Review was concerned that fund members frequently were not able to obtain information from trustees in relation to decisions that affected them. The Review recommended (recommendation 2.9) amending the Act to require a trustee to provide members with reasons for the trustee's decision in relation to complaints.
3.5 The Review was concerned that time limits for lodging complaints to the SCT were too short and out of alignment with related time limits for making claims through the courts. The Review recommended (recommendation 5.7) amending the SRC Act to allow a longer time for the SCT to consider complaints in respect of TPD claims.
Summary of new law
3.6 The Act is amended to require superannuation trustees to, generally on written request, provide an eligible person with the reasons for decisions in relation to a complaint.
3.7 The SRC Act is amended to increase the time limits for making claims in relation to TPD to the SCT.
Comparison of key features of new law and current law
| New law | Current law |
| Trustees will be required to provide reasons for decisions in relation to death benefit complaints.
In relation to other complaints, trustees will be required to provide reasons for decisions when requested in writing. |
A trustee must ensure they take reasonable steps to ensure an affected beneficiary has the right to make a complaint and for it to be properly considered. Superannuation trustees are not required to provide a reason for their decision in relation to an eligible person's complaint. |
| The time limit for members to lodge a complaint with the SCT in respect of TPD claims is increased to six years after the decision.
Where a person has permanently ceased employment, and lodged a claim within two years of ceasing employment, they will have four years from the decision to make a complaint. |
The SCT can only deal with complaints about a trustee's handling of a TPD claim if they lodged it with the SCT within two years of a trustee decision and, in the case where a beneficiary permanently ceases employment because of the injury or illness in which the TPD claim relates, that the claim was lodged with the trustee within two years of the beneficiary ceasing employment. |
Detailed explanation of new law
Death benefit complaints
3.8 The Act is amended to provide that if an eligible person, which includes a beneficiary, executor of the estate of a former beneficiary, or a person that has an interest in the death benefit, makes a complaint that relates to the payment of a death benefit then the person will be given written reasons for the decision in relation to the complaint, when the person is given notice of the decision. [Schedule 1, item 74, subsection 101(1)]
3.9 Where no decision in relation to a death benefit complaint has been made within 90 days, and an eligible person makes a written request for reasons for that non-decision, written reasons are to be given to the person within 28 days after the request is given to the trustee. [Schedule 1, item 74, subparagraph 101(1)(c)(ii) and paragraph 101(1)(e)]
3.10 It is possible that the 28-day period set out in proposed paragraph 101(1)(e) may be too short, for example in cases where a Board only meets once a month. To deal with such a case, the Australian Securities and Investments Commission (ASIC) will be able to permit a longer period in which the reasons can be given. It is expected that in cases where ASIC permits a longer period, the Government will consider including a requirement in the Corporations Regulations for the RSE licensee to give the person who made the request notice of the extension. [Schedule 1, item 74, paragraph 101(1)(e)]
Other complaints
3.11 Superannuation trustees will also be required to provide eligible persons, on written request, with reasons for a decision (or non-decision) in relation to complaints other than those relating to death benefits. [Schedule 1, item 74, paragraph 101(1)(d)]
3.12 In both instances, the written reasons are to be given to the person within 28 days after the request is given to the trustee. [Schedule 1, item 74, paragraph 101(1)(e)]
3.13 The Government will consider including a requirement in the Corporations Regulations for trustees to inform members that they can request written reasons for a decision made by the trustee in relation to non-death benefit complaint.
3.14 As is the case with death benefit complaints, it is possible that the 28 day period set out in proposed paragraph 101(1)(e) may be too short, for example in cases where a Board only meets once a month. To deal with such a case, ASIC will be able to permit a longer period for the reasons to be given. The Government will consider including a requirement in the Corporations Regulations for the RSE licensee to give the person who made the request notice of the extension. [Schedule 1, item 74, paragraph 101(1)(e)]
Time limits for total and permanent disability claims
3.15 The SRC Act is amended to increase the time limits within which beneficiaries can lodge complaints with the SCT regarding TPD claims.
3.16 Presently, should a member wish to lodge a complaint with the SCT in relation to a trustee decision on a TPD claim, subsection 14(6A) of the SRC Act requires the complaint to be made to the SCT within two years of the trustee's decision to which the complaint relates.
3.17 The amendment increases the time limit within which a beneficiary can lodge a TPD complaint with the SCT from two years to six years from the time the decision to which the complaint relates was made. [Schedule 1, item 124, subsection 14(6A)]
3.18 Where a person has permanently ceased employment because of the physical or mental condition that gave rise to the claim, the time period will only be increased to four years, because in that case, the person has already had two years from ceasing employment to lodge their claim. The four year time period in paragraph 14(6A)(a) reflects the two-year time limit in subsection 14(6B). [Schedule 1, item 124, paragraph 14(6A)(a)]
3.19 The amendment will not change the time limits in subsection 14(6B) of the SRC Act.
Application and transitional provisions
3.20 The changes apply to decisions made on or after 1 July 2013. [Schedule 1 , Part 2, item 126]
3.21 The changes will also apply in the case where no decision has been made and the 90 day period has expired after 1 July 2013. [Schedule 1, Part 2, item 126]
3.22 Changes to time limits for TPD complaints apply in relation to decisions made on or after 1 July 2013. [Schedule 1, Part 2, item 128]