PRESS RELEASE – STEP Australia urges renewed focus on superannuation death benefit planning following Cbus reforms
STEP Australia (The Society of Trust and Estate Practitioners Australia Limited) says Cbus’s recent changes to its death benefit processes highlight the critical importance of effective administration of superannuation death benefits and the need for members to review their estate planning arrangements.
The industry super fund Cbus was ordered by the Federal Court of Australia to pay an AUD25-million fine in 2025 for serious failures in processing members’ death benefits and insurance claims. Cbus has since changed its death benefit nomination framework, including the introduction of online non-lapsing binding death benefit nominations, the removal of three-year lapsing nominations and the discontinuation of non-binding death benefit nominations.
The changes reflect the growing focus on timely payment of death benefits and the challenges trustees face in balancing efficiency, member choice and procedural fairness.
STEP Australia Chair Jim O’Donnell says: ‘The Federal Court’s imposition of a substantial penalty on Cbus demonstrates the importance that all superannuation fund trustees must place on the management and administration of superannuation death benefits.
‘Death benefits are often one of the most significant assets that are dealt with following a person’s death. Trustees must ensure they have processes in place that deliver outcomes promptly while maintaining confidence in the fairness and integrity of the system.’
Cbus appears to be taking steps to address administrative shortcomings that contributed to prolonged delays for beneficiaries. However, STEP cautions that some of the announced reforms represent a significant shift in how death benefit determinations may operate in practice.
Jim O’Donnell says: ‘While measures designed to reduce delays are welcome, it appears that some of the administrative efficiencies may come at the cost of a more open and flexible death benefit determination process.
‘From an estate planning perspective, the changes are significant. What may have worked previously for Cbus members may no longer operate in the same way once the new arrangements commence.
‘In particular, with the removal of non-binding nominations and a change in how members who have not made nominations are dealt with, we encourage all Cbus members to review their superannuation death benefit nominations as an important part of their estate planning.
‘Members should carefully consider whether their existing nominations remain appropriate and whether they should put binding nominations in place. They also need to review how their superannuation arrangements interact with their wills, trusts and broader succession planning objectives.’
STEP Australia encourages Cbus trustees to actively communicate with members regarding the implications of the reforms.
Jim O’Donnell says: ‘These changes reinforce the importance of careful superannuation estate planning. Trustees should take every opportunity to encourage members to review their beneficiary nominations and obtain appropriate professional advice where necessary.
‘While the introduction of an online platform to make a binding nomination is a bold change of practice, it also raises concerns about the potential for misuse and abuse leading to adverse outcomes.
‘Allowing binding nominations to be made via an online platform that does not adopt the usual legal rigors, such as witnessing, increases the risk that members will make nominations without professional involvement. In turn this could lead to more ineligible beneficiaries being nominated, and a greater risk of undue influence or elder abuse, which can be difficult to detect and prove.’
‘The developments serve as an important reminder that death benefit nominations should not be treated as a “set and forget” exercise, particularly when fund rules and administrative processes change.’
CONTACT INFORMATION:
For further information, please contact: Liz Nightingale Skinner, Communications Manager, STEP, email liz.skinner@step.org, tel +44 (0) 20 3752 3706, or Jim O’Donnell TEP, Chair of STEP Australia, E: jodonnell@jacmac.com.au
ABOUT STEP:
STEP is the global professional association for practitioners who specialise in family inheritance and succession planning. STEP works to improve public understanding of the issues families face in this area and promotes education and high professional standards among its members. STEP members help families plan for their futures, from drafting wills to issues surrounding international families, protection of the vulnerable, family businesses and philanthropic giving. Full STEP members, known as TEPs, are internationally recognised as experts in their field, with proven qualifications and experience.
Find out more at www.stepaustralia.com