The SA District Court has ruled that a superannuation trustee breached its duty to act in the best interest of a deceased member as it failed to give proper notice of the proposed cancellation of her life insurance benefits. The applicant, as the executor for the estate of the deceased member, made a claim for $259,721 on a life insurance policy with her super fund’s insurer (AMP Life). The insurer rejected the claim on the ground that the life insurance policy had been cancelled by the super fund prior to the death of the member. The deceased was a member of the fund through her previous employment with the Workers Employment Association of South Australia (WEA) until 2014.
In March 2019, the Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019 (PYSP Act) inserted s68AAA of the SIS Act requiring a trustee to ensure that insurance is not provided for members whose accounts have been inactive for 16 months, unless the member has opted-in. In purported compliance with s68AAA, AMP Super sent emails to the deceased advising about the legislation and her right to elect to opt-in for insurance. A third email was sent advising that her policy had been cancelled on the basis that it was not able to provide insurance to the deceased after 1 July 2019. The deceased did not receive the emails as they had been sent to her former work email address, which she had not accessed since 2014. The deceased died on 16 October 2019 at age 54.
The Court ruled that AMP Super breached its duty to act in the best interest of the member under s52(2)(c) of the SIS Act as it did not give proper notice of the proposed cancellation of the deceased’s life insurance. The Court said AMP Super was required to ensure that the deceased was given the right to elect for the insurance to continue but the emails had been sent to the wrong email address which she did not receive. By not giving notice and thereby not giving the deceased the right to elect to continue her life insurance, the Court found that AMP Super did not act in the best interests of the deceased. As a result, the Court entered judgment against AMP Super for $259,721.
(Steer v AMP Life Limited & AMP Superannuation Ltd [2021] SADC 109, District Court of South Australia, Burnett J, 8 October 2021.)
[Tax Month – October 2021 – Previous Tax Month; 17.10.21; LTN 198, 198, 14/10/21]