Zurich finds some Better Super rules falling short

Remaining complexity in superannuation rules following last year’s Better Super reforms is causing retirement and estate planning difficulties and is also unfair on some people, according to wealth manager Zurich.

In a new report white paper, ‘Death and taxes are certain — super still confounds’, Zurich said there are several anomalies in the current super rules that deserve urgent review by the Government.

Technical services manager Dimitri Diamantes, author of the white paper, said a key problem with the current rules is that tax on super death benefits is a “source of complexity and unfairness”.

“If people don’t fit into certain types of beneficiary groups — namely a member’s spouse, a child of any age, interdependent or financially independent — a death benefit can only be paid to them via that member’s estate.

“Adult children, for example, are not entitled to receive the death benefit of a member as an income stream, while a financially dependant nephew can,” he said.

Other anomalies requiring government review relate to the treatment of anti-detriment payments and entitlements, death benefits containing insurance proceeds, and differential tax treatment, he said.