Sometimes it’s hard to see the forest for the trees. The financial planning industry is facing a lot of change, it’s coming quickly, and it’s difficult to work out exactly what the outcome is likely to be.

Read more: Avoiding unintended consequences

A common strategy to reduce the effective cost of total and permanent disability (TPD) insurance premiums is to hold the policy inside superannuation.

However, this strategy may become less effective from July 1, 2011. This gives advisers a year to provide new advice to affected clients and, in some cases, move the insurance out of superannuation. If legislation is not passed to ensure this change applies only from 2011, the reduced deduction could be backdated to July 1, 2004.

Read more: Turning insurance inside out

The death benefits in su­perannuation can be quite substantial, even if the person’s ac­count balance is not. This is because many funds provide members with substantial levels of life insurance.  Disputes commonly arise over the payment of superannuation death benefits, so it is important to discuss the implications carefully with clients and to consider ways to mitigate the problems. Regardless of age, everyone with money in su­perannuation should consider who they wish to receive the death ben­efits and how to ensure the money gets to the intended beneficiary. Careful planning can avoid disputes and ill feeling between family members, but it can also help to avoid lengthy payment delays.  To minimise disputes, advisers should discuss with clients: • Who can potentially make a claim for the death benefits; • Who the client wishes to receive their death benefits; • The options for binding death benefit nominations; • The importance of having a Will that includes clauses to cover the payment of superannuation death benefits. How things can go wrong is best analysed by looking at real life case studies, such as disputes resolved through the Superannua­tion Complaints Tribunal (SCT). Approximately one-third of all SCT cases involve disputes over the payment of death benefits. 

Read more: Proving financial dependency or interdependency

Karen and Steve, aged 58 and 62, are retiring on June 30. They have been contributing to super over their working lives and feel the time has come to reap the rewards of their hard work.

Karen would like to withdraw a lump sum of $100,000 and purchase an account-based pension with the remaining $400,000. Steve has decided to commence a pension with $750,000 and leave the remaining $50,000 in super.

Read more: Keeping it in proportion