Super fund members should take the trouble to check their account statements to make sure they are accurate. There is a chance they will contain errors, which could, if not picked up early, cause problems years down the track.
The Superannuation Complaints Tribunal reports that around 5 per cent of the complaints it receives are about account balances. In the September quarter the Tribunal received 533 complaints, 4.9 per cent of which related to the calculation of account balances.
Many of the complaints relate to a trustee’s attempted recovery of an overpayment or the correction of an overestimation.
The SCT says: “Complainants come to us confused, wondering how the super fund can ask for money back, or how they can be sure the new calculation is correct.”
Most incorrect estimates can be attributed to one of two things: data (such as the contribution amount, recipient or category) is entered incorrectly; or there is a problem with the software used to calculate the benefit.
The SCT says trustees have an obligation to perform their duties and exercise their powers in the best interests of members and to act fairly in dealing with members.
In some cases, trustees may seek the repayment of an overpayment to a member or to adjust an account balance, so that other members are not disadvantaged. Here are a few examples from the SCT’s case file.
Overpayment. The super fund member retired from full-time work in 2006 and then in 2008 exited the super fund, with the balance paid to a bank account.
In 2014 the fund trustee advised the former member that she had been overpaid and sought repayment of the overpayment, which was around 2 per cent of the payout.
The former member complained, questioning the right of the trustee to seek reimbursement almost six years after she had exited the fund and also questioning the calculation.
The trustee acknowledged that a considerable amount of time had passed between the payout and the review of the transaction but argued that it had the right to seek reimbursement.
The Tribunal looked at whether the repayment would cause “considerable financial hardship”, concluding that it would not. It also reviewed the trustee’s figures and was satisfied that they were correct. The Tribunal ruled in favour of the trustee.
Defined benefit. In 2004 the fund member changed her work category and the trustee did not update this information. If the change had been recorded, the member’s defined benefit guarantee would have been crystallised at that date.
The member accepted a redundancy package in 2012 and retired, exiting the division of the fund where the error had occurred and moving to another.
In 2014, the trustee identified an overpayment related to the work change in 2004 and notified the members of its intention to deduct the overpayment from her account.
The member complained to the SCT, saying her decision to retire was based on the incorrect information and had she known her true balance she would have continued to work
The trustee argued that it was obliged to recover the overpayment.
The Tribunal found that the trustee had provided incorrect information and the member relied on that information to her detriment, deciding to leave a well-paying job and retire. The complainant had demonstrated change of position as a result of the overpayment.
The Tribunal set aside the trustee’s decision and ordered it to return the overpayment plus interest.
Misallocation. Early last year the member contacted the trustee to arrange a transfer to another fund. In the course of processing the transfer, the trustee discovered that contributions meant for another member had been misallocated to the member’s account over a period of almost three years.
Due to an earlier rollover requested by the member, the balance was less than the amount of misallocated funds. The trustee withdrew the full balance to reallocate to the other member and closed the member’s account.
The member complained that the trustee had not been forthcoming during discussions. She said she had been assured that her account would not be touched until the trustee could provide evidence of the misallocation, but the trustee then withdrew the balance without her knowledge.
The trustee apologised for the error and the miscommunication and acknowledged that the member’s internal dispute experience had been unsatisfactory. The trustee and the member signed a settlement agreement.