SCT determination absolves funds on planner mistakes

Superannuation funds cannot be held responsible for correcting mistakes by financial planners which result in disadvantage to members.

That is the bottom line of a recent determination of the Superannuation Complaints Tribunal (SCT) which held that a superannuation fund did not have to have to compensate a member who lost a portion of his Age Pension due to an inadvertent mistake involving the rollover of a Term Allocated Pension (TAP) to another fund.

The tribunal was told that the rollover of partial funds held in the fund invalidated the Complainant's 50 per cent Asset Test Exemption (ATE) from Centrelink which ultimately resulted in a permanent reduction of the complainant's and his wife's pension entitlements.

As a result of the Centrelink decision, the complainant claimed the fund had failed in its duty of care to advise him of the financial consequences to his social security pension, if he rolled over only part of the funds invested with the fund. He therefore sought compensation for the present value of the lost future pension benefit.

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However, the fund argued that it was not the role of the trustee to inform members of any social security implications of withdrawing funds from a TAP and it pointed out that the request for the rollover had been made by a financial adviser.

It was also pointed out that the withdrawal instruction form contained an explicit warning that there could be income support consequences from the rollover and that the member should seek financial advice if this was relevant. The warning indicated there was no undertaking on the part of the trustee to provide such advice.

The SCT determination said that, in these circumstances, both the complainant and his financial adviser when completing the form were put on notice about there being possible implications from a rollover which required advice from bodies other than the trustee.

The determination said the tribunal was satisfied from the evidence provided that there was sufficient warning to the complainant to obtain independent financial advice about the consequences of rolling over his TAP in the fund into another fund and that it (the superannuation fund) had no general duty or obligation to do more.