Tim Reardon

“The Housing Industry Association supports allowing self-managed superannuation funds to continue using Limited Recourse Borrowing Arrangements to finance the construction of new homes while the impact of the Government’s prohibition is properly assessed,” said HIA Chief Economist, Tim Reardon.

“Modelling has been published on the expected housing supply consequences of other Budget measures. The same standard should apply to a policy that directly restricts finance for new housing.

“If a comprehensive assessment demonstrates that prohibiting SMSF borrowing for newly constructed homes provides a net public benefit, the Government can make that case.

“Until then, Australia should not sacrifice additional housing supply without the evidence to justify doing so.

“Legislation expected to be introduced into Parliament today provides an opportunity to allow SMSFs to continue to borrow to build new homes.

“The prohibition on new residential property LRBAs came into effect on 10 August, without the publication of modelling of its impact on housing supply, rental supply, apartment pre-sales or progress towards the Government’s housing targets.

“At a time when Australia is already failing to build enough homes, restricting a source of finance for new housing should require a clear and demonstrated public benefit.

“HIA’s survey of Australia’s largest detached home builders identified 3,613 signed contracts involving SMSF borrowing that had not commenced construction when the policy was announced. Builders expected around 2,415 of those contracts to be cancelled.

“HIA has also estimated that the restriction could result in detached home commencements being around 3.5 to 5 per cent lower than otherwise, equivalent to around 4,000 to 5,500 fewer detached homes in a year.

“These estimates do not include the potentially larger impact on apartment construction, where investor pre-sales can be critical to securing project finance.

“The Government should now undertake and publish a comprehensive cost-benefit analysis of the restriction, including its impact on detached housing, apartment construction, rental supply, government revenue and housing affordability.

“Until that work is completed, SMSFs should, at a minimum, continue to be permitted to borrow where the investment finances the construction or acquisition of an additional new home.

“There is also an important question about the information already available to government.

“Government agencies collect extensive information on SMSFs, LRBAs, residential property transactions and housing construction. At the very least, the Government should publish the number and value of residential properties acquired using LRBAs and provide whatever information is available to identify the proportion associated with newly constructed housing.

“If existing administrative data can identify the number of new homes financed through LRBAs, that information should be released to allow industry to adjust to the change in market demand for new homes.

“Australia won’t get to building 1.2 million homes by restricting those that have to borrow to build a new home,” concluded Tim Reardon.

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Damien Mu

Leading life, health and wellbeing insurer AIA Australia has announced a new Premier Partnership with Beyond Blue, amplifying its long‑term commitment to improve the mental health outcomes of Australians.

The partnership brings together AIA Australia’s leadership in the life and health insurance industries with Beyond Blue’s national reach and deep expertise on mental health.

With a shared focus on prevention and early intervention, Beyond Blue and AIA Australia will work together to address rising mental health challenges and reduce the number of Australians reaching crisis before seeking help.

To kick off the partnership, the organisations joined forces with the Melbourne Storm for its Mental Health Round, in an effort to encourage people to Tackle Tough Together.

Around 43 per cent of Australians have experienced a mental health condition in their lifetime, with anxiety and depression affecting millions of people across all life stages.^[1] Despite record levels of public and private investment in mental health care, prevalence continues to rise, reflecting a system that is geared towards acute and crisis care, rather than prevention and early support.^[2]

AIA Australia has reported an exponential increase in mental health-related claims, with mental health claims rising from around 15% of all disability claims in 2014, to approximately 26% in 2025 – a figure that continues to increase in 2026.

Beyond Blue CEO Georgie Harman AO said, “Accessing support early for yourself or someone you care about can prevent problems escalating. But too many people aren’t able to get that early support, only getting help once they’re really distressed or in crisis – and sometimes struggling for up to 10 years. At the same time, too many Australians simply aren’t getting the support they need, with a system still geared towards responding to crisis rather than preventing it.

“Through this partnership with AIA Australia, Beyond Blue has an opportunity to reach people sooner, meeting them where they are – in workplaces, communities and everyday moments – with effective, practical services and tools before things escalate.”

AIA Australia CEO Damien Mu said he believed the partnership held huge potential to drive meaningful change. “At AIA Australia, our purpose is to make a difference in people’s lives. We’re pleased that this partnership with Beyond Blue will help us achieve our ambition to help Australians live healthier, longer and better lives.”

Under the partnership, AIA Australia and Beyond Blue will prioritise:

• Earlier intervention and prevention, including insights, tools and digital solutions that encourage people to seek help sooner
• Workplace mental health – supporting employers to address psychological risks and promote mentally healthier work environments
• Thought leadership and advocacy, including policy reform aimed at reducing systemic barriers to early mental health support
• Community reach and impact, leveraging Beyond Blue’s engagement with one in six Australians each year

Mr Mu said that both organisations were eager to start working closely together and change the narrative on mental health.

“As a life insurer, we unfortunately see people when their mental health has deteriorated to a point where they are unable to work. What’s currently described as ‘early intervention’ is often happening quite late in someone’s experience and after they’ve lodged a claim.

“We believe that there are many strong opportunities to change this. For example, employers could offer targeted mental health support in the workplace that can deliver real preventative impact.”

“As a nation, we have become trapped in a “sick‑care” cycle. By focusing more on early warning signs and underlying contributors, we can support people sooner and reduce the risk of their mental health deteriorating.”

——–

Notes:
[1] ABS National Study of Mental Health and Wellbeing 2020-2022
[2] Ibod.

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Damien Mu

Leading life, health and wellbeing insurer AIA Australia has released its inaugural Impact Report, showcasing the meaningful benefits it delivered in 2025 to customers and the community through financial protection, early intervention and wellbeing support.

The report highlights how AIA Australia supported customers across the nation through some of life’s most challenging moments, paying more than $2.4 billion across more than 34,000 claims during the year.

This includes:

• $726 million across 6,365 Total and Permanent Disability (TPD) claims
• $864 million across 22,777 Income Protection (IP) claims
• $146 million across trauma claims

These outcomes reflect AIA Australia’s promise of providing financial certainty with care, empathy and speed when customers need it most. Mental health claims were the leading cause of claim across both retail and group insurance, prompting ongoing interventions from the insurer’s wellbeing and product teams to ensure product sustainability and appropriate support is prioritised.

Beyond claims, the report highlights AIA Australia’s commitment to shared value through its focus on prevention, industry and environmental sustainability and social impact.

Through its AIA Embrace wellbeing ecosystem, the company continues to invest in programs that support customers before, during and after a claim, helping them improve their health, wellbeing and long-term resilience through prevention, early intervention and recovery support.

In 2025:

• Nearly 10,000 customers were referred to AIA Australia’s in-house Wellbeing Team
• Participants in the Mind Coach program reported an 83% improvement in psychological symptoms, outperforming industry benchmarks*
• Customers completing the Pain Coach program reported a 91% improvement in function, significantly exceeding industry benchmarks*
• Cancer Coach referrals increased by 20%, driven by earlier engagement and intervention
• 67% of customers participating in return-to-work focused rehabilitation programs successfully returned to work
• AIA Australia’s Early Support absence management programs achieved a 65% return-to-work rate, helping employees who had been absent from work for ten consecutive days reconnect with work sooner

These outcomes highlight the value of early, targeted support in improving recovery, reducing claim duration and delivering better long-term wellbeing outcomes.

The report also showcases the impact of AIA Vitality, which experienced one of the strongest growth periods in its history in 2025, reaching 280,000 members. Growth was supported by the launch of AIA Vitality with a major Group Insurance partner, enabling insured superannuation members to connect everyday healthy behaviours with long-term financial wellbeing through regular superannuation contributions.

Within the first three months of launching, members had directed more than 6,500 Active Benefit rewards into their superannuation accounts, totalling $32,500. On average, 31% of members who achieved their Active Benefit target chose to contribute their reward to superannuation, highlighting growing engagement with initiatives that link better health behaviours to improved long-term financial outcomes.

More broadly, AIA Vitality members completed more than 70,000 preventative health checks, more than 1.5 million mental wellbeing activities, and over 800,000 gym visits during the year, demonstrating strong engagement in proactive health management and wellbeing. In 2025, AIA Vitality members redeemed $4.6 million in Active Benefit rewards, with $3.8 million directed towards cost-of-living relief, including Woolworths vouchers and Commonwealth Bank savings contributions.

AIA Australia also continued to invest in innovation, including the launch of AIA Exchange, helping create a more connected, intuitive and efficient experience for customers, super funds and administrators.

AIA Australia Chief Executive Officer and Managing Director Damien Mu said the report reflects the organisation’s commitment to delivering meaningful impact beyond insurance.

“At AIA Australia, our purpose is to make a difference in people’s lives. While paying claims remains one of the most important ways we deliver on that promise, we’re steadfast on helping Australians stay healthier, recover sooner and achieve better long-term outcomes.”

“AIA’s Impact Report demonstrates the power of combining financial protection through insurance with prevention, early intervention and wellbeing support. Whether it’s helping a customer through cancer treatment, supporting their mental health recovery, or enabling a successful return to work, our goal is to create meaningful impact at every stage of life’s journey.”

“We’re incredibly proud of what our people, partners and customers have achieved together in 2025, and we remain committed to helping Australians live healthier, longer, better lives.”

The inaugural Impact Report provides a comprehensive view of AIA Australia’s contribution to improving the physical, mental and financial wellbeing of Australians. It highlights not only the significant claims support provided during times of need, but also the growing impact of prevention, early intervention and recovery programs that help people achieve better outcomes throughout their lives.

Read the report.

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The recently launched evergreen vehicle is focused on mid-market hybrid capital and special situations investments, providing investors with access to a corner of the market Alceon believes is underserved: the space between traditional private equity and private credit.

Until now, Alceon has deployed this strategy via the firm’s balance sheet and closed-end investor syndicates. The Partners Fund institutionalises this capability into a single-access defensive-growth product, with investment applications accepted quarterly.

The Fund’s launch coincides with tighter macroeconomic conditions that present a unique opportunity for the Fund’s flexible mandate to provide solution capital that often falls outside typical private credit and private equity mandates.

Alceon is co-investing 10% alongside investors in the Fund (up to $40 million), demonstrating its conviction in the strategy and strong investor alignment. Targeting a net return of 12-15% p.a., including a cash yield of 5% p.a, the Fund will be led by Co-Portfolio Managers and Hybrid Solutions team Managing Directors, Daniel Chersky and Justin Lal.

“We are delighted to provide advisers and investors with a new avenue to access a strategy that we believe offers exposure to the defensive attributes of credit, combined with the growth upside of special situations,” said Mr Chersky, Managing Director, Head of Hybrid Solutions at Alceon. Mr Lal added “The Fund’s uniquely flexible mandate positions it well in the current environment where structuring capability and speed of execution is critical, especially where refinancing pressure and stress are present.” Hybrid Solutions at Alceon is focused on designing and delivering bespoke, flexible capital solutions for companies, real asset owners and specialty lenders. The strategy is industryagnostic and invests across the capital structure from senior-secured loans, hybrid instruments and structured equity – tailored specifically to each situation.

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China is particularly interesting because we are seeing significant developments in AI.

China is emerging as one of the most underappreciated opportunities in Asian equities as investors broaden beyond the region’s established AI and semiconductor leaders, according to Aberdeen Investments.

Pruksa Iamthongthong, head of APAC equities at Aberdeen Investments, said investors remained positive on Asia’s AI-driven growth story but were becoming more selective on valuations and looking beyond a small group of technology champions.

“Investors haven’t rotated away from Asia’s AI winners, but they are broadening their exposure across the ecosystem and becoming more selective about valuation and positioning,” said Iamthongthong.

“We are seeing opportunities beyond the obvious AI leaders, particularly where fundamentals are improving faster than market expectations. China is particularly interesting because we are seeing significant developments in AI, advanced manufacturing and innovation, while global investor positioning remains cautious.”

More than 80 per cent of China Fortune 500 companies have begun adopting AI, while Chinese AI capital expenditure is expected to reach US$116 billion in 2026, up from US$89 billion in 2025[1].

Iamthongthong said investor sentiment towards China remained dominated by concerns around property and domestic consumption, potentially overlooking the strength of its technology and industrial sectors.

“Some of the most exciting developments in China are happening across AI, semiconductors, automation, software and advanced manufacturing,” she said.

“Yet global investors remain underweight China. We see a compelling gap between improving fundamentals and investor positioning, with valuations still undemanding.”

Taiwan is also one of Aberdeen’s highest-conviction markets with opportunities across the broader AI supply chain, including advanced packaging, connectivity, semiconductor equipment and networking.

“Taiwan remains one of the clearest ways to gain exposure to the structural growth in AI and technology spending globally.

“We particularly like the ‘picks and shovels’ of AI – the companies providing the critical infrastructure and enabling technologies required for the next stage of AI adoption.”

Korea remains a preferred market, with opportunities extending beyond semiconductors into industrial and shipping businesses benefiting from power-grid investment, electrification and the energy transition.

“Korea offers an interesting combination of AI-driven earnings growth and improving capital discipline. We are seeing stronger dividends, better capital allocation and a greater focus on shareholder returns.”

Iamthongthong said the next phase of the Asian equity story would require investors to look beyond broad market exposure and focus on companies where fundamentals were improving faster than market expectations.

“We are looking for companies where fundamentals are improving faster than market expectations, while remaining disciplined on valuation and position size,” she said.

“In Taiwan, that means AI infrastructure and companies with strong earnings visibility. In Korea, it means businesses benefiting from the memory cycle, industrial policy and improving capital discipline. In China, we see opportunities where innovation, AI adoption and advanced manufacturing are translating into stronger earnings potential.”

While the outlook remains constructive, Iamthongthong said key risks included a sharper-than-expected slowdown in the US, a pullback in AI capital expenditure or semiconductor demand, changes in China’s growth trajectory, currency volatility and geopolitical tensions, particularly around US-China relations and Taiwan.

“AI remains an important structural driver for Asia, but we are moving into a phase where investors need to look beyond the obvious winners.

“We believe the next opportunities will come from identifying companies where structural growth, improving fundamentals and attractive valuations come together, and that is where active stock selection becomes increasingly important.”

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Kellie Wood

Investors should prepare for a more selective fixed income market over the coming quarter, as economic data increasingly takes precedence over central bank guidance and divergence between economies creates new opportunities, according to Schroders head of fixed income, Kellie Wood.

Wood says investors should be less focused on trying to predict the next global rate move and instead look for markets where the economic and policy outlooks are diverging.

“The next quarter is going to be about the data, not what central banks say they are going to do,” said Wood.

“For investors, that means being more selective about where they take duration and credit risk, rather than assuming all bond markets will move in the same direction.”

Wood believes Australian fixed income is well placed as softer inflation gives the RBA greater scope to move towards lower rates, while the US still faces a more uncertain inflation outlook.

“We continue to see a strong case for Australian bonds relative to US Treasuries. For investors, the opportunity is not simply that Australian rates could fall, but that the separation between Australia and the US creates an attractive relative-value opportunity.”

With credit spreads already tight, Wood says investors should focus on the income available from high-quality credit rather than relying on further spread compression to drive returns.

“Credit continues to offer investors attractive income, but we think security selection will become increasingly important.

“We favour high-quality Australian corporate and bank credit, where strong balance sheets and demand provide a solid foundation for returns.”

Wood says the changing market environment means investors need to think beyond whether central banks are cutting or holding rates.

“Investors have spent a long time focusing on the next central bank decision. The more important question now is where the economic data is taking us,” Wood said.

“That creates opportunities for investors who are prepared to look across markets, sectors and the yield curve rather than simply making a broad call on bonds.”

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Emanuel Datt

Datt Capital’s chief investment officer, Emanuel Datt, says this ASX reporting season is exposing dispersion at the stock level and that the underlying results have largely matched guidance and haven’t justified the “doom and gloom” narrative running since March.

“But forward guidance for FY27 has turned more conservative, and that’s because of the recent softening in sentiment. So our positioning is becoming a little more conservative. It’s not a good environment or a bad one, it’s really just a rotation towards conservatism,” says Datt.

“Yesterday we saw that CBA’s results have put them in a far better spot than other banks like Westpac. It really demonstrates the dichotomy between performers and non-performers, and how the market is treating it. Westpac was sold off five-odd per cent, CBA is flat. Any underperformance is being punished by investors taking a risk averse approach to equities right now. It reaffirms the importance of fundamental stock picking,” he says.

“The RBA Governor’s recent comments have reinforced caution amongst investors. The Governor didn’t rule out further rate rises. She said inflation could rear its head again. Markets love certainty on the direction of rates, but my read is that rates will probably stay steady, though the option to hike remains if inflation picks up again. That’s feeding into what we’re seeing in equity markets. I don’t think there’ll be a cutting cycle, because inflation is still front and centre for the RBA.”

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US exceptionalism is unlikely to disappear in the near term, but the conditions behind its extraordinary outperformance may be shifting

US equities have delivered years of outsized returns, but a narrowing gap is emerging between the case for continued American dominance and the case for a more diversified global approach.

The US retains genuine structural advantages, including its position at the centre of AI innovation, favourable demographics and deep capital markets. But these strengths are increasingly priced in. US equities trade at a historically high valuation premium to global peers, raising the bar for future returns. Compounding this, market gains remain heavily concentrated in a small group of mega-cap technology companies, meaning slower earnings growth, tighter regulation or unexpected disruption at any one of them could have an outsized effect on the broader market.

At the same time, opportunities outside the US are becoming more attractive. Europe’s industrial automation and advanced manufacturing sectors, Japan’s governance reforms and improving returns on equity, and India’s demographic and infrastructure tailwinds are drawing growing investor interest. A more multi-polar geopolitical environment, in which governments are seeking greater independence in critical industries, is also expected to support a broader distribution of investment opportunities across regions and sectors.

US exceptionalism is unlikely to disappear in the near term, but the conditions behind its extraordinary outperformance may be shifting. None of this implies abandoning US equities outright. Rather, it points less to a binary choice between the US and the rest of the world, and more to a broader, balanced opportunity set beyond the market’s recent winners.

Read the full insight.

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James Barker

Australian small cap industrials are emerging from one of their most volatile years in recent memory, with Ellerston Capital pointing to a combination of AI infrastructure spending and a deepening national productivity problem as reasons the sector is entering what they describe as “its most attractive set-up in years.”

The Ellerston Australian Emerging Leaders Strategy returned 17.1 per cent net over the June quarter, outpacing the S&P/ASX Small Ordinaries Accumulation Index by 13.8 percentage points and the Small Industrials Index by 8.7 percentage points.

James Barker and Jack Briggs, portfolio managers on the Ellerston Australian Emerging Leaders Strategy, say the quarter marked a turning point not just in performance but in market leadership.

“After a year dominated by resources, Small Industrials beat the Small Ordinaries by 5.1 percentage points in the quarter alone,” Barker says. “That rotation matters because it suggests the market is turning back towards fundamentals rather than commodity price momentum.”

Briggs says the dominant theme running through the strategy’s investment universe is the build out of AI infrastructure and electrification. “Order books at electrical services and data centre contractors are now extending into 2028 and 2029,” he says. “That’s a level of forward visibility these businesses have rarely had.”

Underpinning this thesis is a bleaker macro backdrop. Australia has just recorded its first negative decade of productivity growth on record, averaging -0.2 per cent a year across FY21 to FY25, with FY25 alone down 0.7 per cent. Real income per person has barely moved in six years.

“When output per hour worked is flat, a company can only grow revenue by employing more people,” Barker says. “Costs rise in step with sales, margins compress and growth becomes something a business has to buy rather than something it generates.

“Artificial intelligence is the most credible circuit breaker available and that smaller companies are structurally better placed to capture the benefit than large incumbents.”

Adoption remains early with around 12 per cent of Australian businesses, but Briggs says that should be read as opportunity rather than shortcoming.

“The bulk of the productivity gain has yet to be captured. And because smaller companies don’t carry the legacy systems and restructuring drag that slow larger businesses down, the margin gain from AI adoption falls disproportionately to them,” says Briggs.

Barker adds, “This is a rare case where Australia is not simply a price taker in a global technology cycle. We won’t own the platforms, but we do own the two legs that follow; the build out itself and the productivity gain from adoption. Both are investable and both sit in the same part of the market.”

The strategy holds several companies it regards as direct beneficiaries of the build out, including Southern Cross Electrical Engineering and GenusPlus Group, alongside SKS Technologies and Mayfield Group across its wider coverage universe.

On the adoption side, Briggs points to holdings such as Vista Group as examples of software businesses with proprietary data and embedded workflows that the market, in his view, “wrongly assumes generic AI models can replicate.”

“The companies that convert AI adoption into operating leverage will simply grow faster than the economy around them,” Briggs says. “And almost none of them sit in the ASX 20. This is why the opportunity is difficult to access through index exposure.

“Around 68 per cent of the ASX 200 sits in banks, resources, property, supermarkets and utilities. Which we see the industries of the last boom, while information technology makes up roughly 3 per cent of the index, against about a third of the S&P 500. Neither the infrastructure builders nor the AI adopters we hold sit in the top 20 stocks by market capitalisation.”

The return dispersion has been stark. In FY26, the ASX 200 returned 6.1 per cent and the Small Ordinaries 8.1 per cent, against 28.6 per cent for Australian micro and small caps, ahead of the S&P 500 and in line with the Nasdaq. Large caps, meanwhile, are trading on roughly 21 times forward earnings for around 11 per cent growth, a multiple that is expensive relative to what is on offer further down the market.

The strategy targets Australia’s emerging leaders, which make up about 757 listed companies with market capitalisations between $50 million and $2.5 billion. This segment is both the broadest and least-researched part of the ASX, with many companies carrying little or no broker coverage.

They also point to a long run record of active management adding value in the segment.

Over the past 20 years, top-quartile small-cap managers have delivered approximately 4.7 per cent per annum of alpha and were positive at the one, three, five, 10 and 20-year horizons, a record top-quartile large-cap managers have not matched against the ASX 300 at any horizon.

“That reflects a structural inefficiency that’s best captured through deep fundamental research,” Barker says.

———-

Source: Ellerston Capital, FactSet, June 2026.

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Karen Robinson

When a marriage or relationship ends because of the death of a parent, the question of who is a ‘stepchild’ for superannuation purposes has changed.

In recent years, decisions of the Australian Financial Complaints Authority (AFCA) and the Courts have shifted the legal landscape, which has implications for everyday Australians planning their estates.

In stepfamilies, estate planning is rarely as simple as ‘who gets what’. Instead, couples must grapple with how to fairly distribute assets between the surviving member of the couple and the children from a previous relationship.

In all Australian states the law recognises the right of a stepchild, sometimes conditional, to challenge the Will of a step-parent. This often occurs where a step-child’s natural parent dies before their step-parent but has contributed to the accumulation of the step-parent’s wealth. The step-child may believe that a portion of that wealth should ultimately pass to them.

But what about superannuation?

While these benefits can form part of a deceased estate, they are often instead paid directly to a superannuation member’s dependants. This is not limited to financial dependants and includes, amongst others, adult children and stepchildren.

Recent decisions by AFCA and the Courts have changed the interpretation of who is treated as a stepchild on the death of a superannuation member. The accepted view is now aligned with how the meaning of step-child is interpreted by the Court in Will challenges. This aligns with changing community expectations and the evolution of traditional families in Australia.

Who counts as a stepchild?

A stepchild is the natural or adopted child of your spouse or de facto partner. It is estimated that more than 1 million Australians belong to a stepfamily.[1]

In 2011 the ATO issued guidance that a child ‘ceases to be stepchild of a step-parent when the relationship between the child’s natural parent and the step-parent ends. This means, on the death of the natural parent or the divorce of the natural parent from the step-parent.

It follows earlier cases where the Courts came to this conclusion. In these circumstances the stepchild becomes a former stepchild.

However, the current thinking has changed. The accepted view now is that the relationship between a stepchild and step-parent does not automatically end on the death of the natural parent.

Stepchild versus a former stepchild

A person’s status as stepchild or former stepchild is important because it determines whether they are eligible to be a beneficiary of a superannuation death benefit. Under superannuation laws, a stepchild is eligible, but a former stepchild is not.

If a stepchild becomes a former stepchild then their only means of benefiting directly from a former step-parent’s superannuation death benefit is if they can demonstrate they were a financial dependant of, or lived in an interdependent relationship with, their former step-parent at the time of this person’s death.

AFCA in its current approach to superannuation death benefit complaints recognises the relationship between a stepchild and step-parent continues where:

1. the marital or de facto relationship between the step-parent and natural parent of the stepchild existed at the time of the natural parent’s death, and
2. a parental relationship between the step-parent and stepchild has since been maintained.

An AFCA decision last year found the four adult stepchildren of the member remained as stepchildren despite their natural parent having died before the step-parent and despite them being financially independent of the step-parent.

The AFCA panel accepted that even though their stepmother had dementia the relationship was maintained and the stepmother continued to treat them as her stepchildren.

What is a parental relationship?

Is exchanging Christmas cards or the occasional phone call with a step-parent enough?

The Courts and AFCA look beyond sporadic contact to determine whether a genuine ‘relationship of affinity’ continued to exist between a step-parent and stepchild.

In 2024 AFCA upheld a decision by a superannuation trustee to distribute a deceased member’s superannuation death benefit between the member’s biological child and three stepchildren, finding one stepchild had maintained an ongoing relationship of affinity with the deceased. However, two other stepchildren were excluded because they no longer had a real, substantive relationship with the deceased and were therefore not considered eligible beneficiaries.[2]

While there is no bright-line test, occasional Christmas cards or infrequent phone calls alone are unlikely to be sufficient. Instead, the evidence should demonstrate a genuine, ongoing relationship in which the stepchild continues to be regarded and treated as part of the family.

As AFCA has acknowledged, proving the existence of such a relationship can be challenging, particularly where family relationships have deteriorated over time or disputes arise following the payment of a significant superannuation death benefit.

So how do you evidence the relationship? While it is difficult to evidence visits, telephone calls and practical support for a step-parent with such things as groceries and doctor visits, keeping a record of family gatherings, letters and emails can be helpful. Often individual statements from self-interested parties documenting the nature of the relationship may be all that is available. In the 2024 AFCA decision mentioned previously, the in-person attendance by the stepchildren at their step-parent’s funeral during COVID when attendance was severely restricted carried some weight towards establishing the nature of the parental relationship.

How do you create certainty?

The best way to create certainty is to put in place, and regularly review, a valid binding death benefit nomination.

If you are married and have stepchildren, and you have nominated your spouse as your beneficiary, it’s important to revisit that nomination if your spouse dies before you.

Often these nominations lapse every 3 years so it’s worthwhile checking. A nomination that has lapsed, whether because of time or because the beneficiary you have nominated has died, becomes non-binding and may carry little weight in a superannuation fund trustee’s decision.

A valid binding nomination ensures your superannuation death benefits are paid to your nominated eligible superannuation dependants or to your legal personal representative (your executor, where you have a Will) in accordance with your wishes. This provides you with certainty as to the recipient of these benefits rather than relying on the superannuation fund trustee to decide who should receive your benefit, particularly where complex family dynamics are involved.

It is also important to remember that every superannuation fund has its own governing rules around eligible beneficiaries and binding death benefit nominations. These rules can differ between funds, so they should always be checked.

Finally, people often assume their superannuation death benefits will automatically be distributed under their Will, but this is often not the case. If you have stepchildren, obtaining tailored estate planning advice is critical. An experienced estate planning lawyer can ensure your Will and binding death benefit nomination work together to ensure your wishes are carried out and reduce the risk of expensive disputes after your death.

By Karen Robinson, Senior Estate Planning Lawyer

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