The BFG Report

Welcome to the 2019 Winter Edition of the BFG Report

Super Dependants

If you have a superannuation fund, you’ve probably been asked to nominate your beneficiary. But, super fund trustees  can only pay your super death benefit to eligible dependants or to the legal personal representative (LPR) of your estate. If you haven’t elected a valid beneficiary the super fund trustee generally decides who your super goes to.

Here’s what you and your family need to know about super dependants.

Who Can You Nominate As A Super Dependant ?


A spouse includes a legally married spouse or de facto spouse, both same sex and opposite sex. A spouse can be a person you’re legally married to but estranged or separated from. So, if you haven’t formally ended a marriage, your husband or wife is still considered your dependant under superannuation law. And, while you can’t be legally married to two people, it is still possible to have two spouses — a legally married spouse and a de facto spouse.


A child includes an adopted child or a step-child. Even though a step-child is included in the definition of a child, if you end the relationship with the natural parent or the natural parent dies, the child is no longer considered your step-child. However, they may still be considered a financial dependant or in an interdependency relationship with you and could therefore continue to be a beneficiary of your super.

Financial Dependant

Generally, a person is financially dependent on you if the level of support you provide them is ‘necessary and relied upon’, so that if they didn’t receive it, they would be severely disadvantaged rather than merely unable to afford a higher standard of living.

Interdependency Relationship

Two people have an interdependency relationship if they live together and have a close personal relationship. One or each of them must also provide a level of financial support to the other and at least one of each of them needs to provide domestic and personal care to the other. Two people may still have an interdependency relationship if they do not live together but have a close personal relationship. For example if they’re separated due to disability or illness or due to a temporary absence, such as overseas employment.

Who Is Not A Dependant ?

A person is not a dependant if they are your parents or other friends or relatives who don’t live with you and who are not financially dependent on you or in an interdependency relationship with you. If you do not have a dependant you should direct your super to your LPR and prepare a Will which outlines your wishes.

Legal Personal Representative

An LPR is the person responsible for ensuring that various tasks are carried out on your behalf when you die. You can nominate and LPR by naming the person as executor of your Will. Your Will should outline the proportions and the people you wish your estate, including your super to go to.

** In this article a dependant refers to a ‘SIS dependant’ which is an eligible person under the Superannuation Industry (Supervision) Act 1993 that a member may nominate as a beneficiary.

Investment Market Review – Quarter Ended 31 March 2019

Asset Class – Australian Shares
1 year is    11.7% p.a.
5 year is     7.4% p.a.
10 year is   10.3% p.a.


Australian shares slightly underperformed global markets in the March 2019 quarter, rising 10.9%.

At a sector level, the best performers were Technology (up 20%), Mining (up 15.7%) and Telecommunications (up 14.5%). Relatively speaking, Consumer Staples were the worst-performing sector (up 4%), followed by Financials (up 4.8%) and Healthcare (up 5.5%). Strength in the Australian mining sector was driven by a dam collapse in Brazil that reduced iron ore production. Due to the reduction in world-wide supply, iron ore prices rose and Australian miners such as Rio Tinto and BHP benefited from increased demand and higher prices.Technology shares were clear outperformers during the March 2019 quarter with investors comfortable chasing growth opportunities in this space.

Asset Class – Listed Property Trusts
1 year is  25.9% p.a.
5 year is  14.9% p.a.
10 year is  15.3% p.a.


The Australian real estate investment trust (A-REIT) sector generated a strong return of 14.4% for the March 2019 quarter influenced by a decline in bond yields. In addition, we saw the growth prospects of select REITs such as Dexus and Goodman Group re-rated by investors on the back of positive earnings results relative to the broader market. Retail REITs by contrast such as Scentre Group continued to track at a discount to their underlying asset base as investors were concerned about their prospects given poorer retail sales.

A-REITs are often viewed by investors as a substitute for bonds so falling bond yields can result in stronger performance for this asset class. The trigger for lower bond yields was weaker Australian economic data.  For example, economic growth in 2018 was lower than expected. This saw markets increasingly price-in rate cuts, driving yields on existing bonds lower. Therefore, by comparison, yields on income substitutes like A-REITs look more attractive so their prices go up as a result.

Asset Class – International Shares
1 year is  12.3% p.a.
5 year is  12.6% p.a.
10 year is  12.1% p.a.


The international share market had a strong March quarter with the MSCI World Index in Australian dollar terms gaining 11.5%.

The shift in international markets has been driven by two factors. Firstly, the US Federal Reserve has effectively signalled an end to interest rate hikes for 2019. This means it will continue to be easier for consumers and businesses to borrow, supporting economic growth. Secondly, there was positive progress on the US-China trade war. Both countries halted their ‘tit-for-tat’ on raising tariffs against each other and are working towards a final deal to resolve their disagreements, calming fears that further escalation would hit international trade and reduce global growth. The easing of trade tensions and the end of US interest rate increases in the short term have both supported riskier assets like shares. Prices have now almost completely recovered from the December 2018 sell-off.

Asset Class – Fixed Interest
1 year is    7.2% p.a.
5 year is    5.1% p.a.
10 year is  5.5% p.a.


Both the Australian and US yield curve fell during the March 2019 quarter for different reasons. In Australia, the focus was on the weaker economic environment with soft and hard data highlighting economic weakness. An example of soft data is the weaker business sentiment disclosed in the NAB Business surveys which reflected weaker business confidence compared to the historical average, falling over the course of 2018 to weakly positive levels. Business conditions have held up better, supported by strong commodity prices but have still weakened in recent months.

Asset Class – Cash
1 year is    2.0% p.a.
5 year is    2.1% p.a.
10 year is  3.01% p.a.


The Reserve Bank of Australia (RBA) left the cash rate unchanged at a historical low of 1.50% in the March quarter.

It focused on the disconnect between slowing economic growth and a strong labour market. This was triggered, in part, by disappointing Australian economic growth data for the December 2018 quarter (released in the March quarter).

High Yielding Internet Savings Accounts

Financial Institution and Interest Rate

RaboDirect Bank – Rate 3.05% p.a.

Citi Online Saver – Rate 2.90% p.a.

St George – Maxi Saver – Rate 2.70% p.a.

ME Bank Online Saver- Rate 2.85% p.a.

ING Savings Maximiser – Rate 2.80% p.a.

Rams Saver – Rate 2.80% p.a.

Rates are subject to conditions and change.

Rates are correct as at 29/5/2019.