Super beneficiary: Why you need to make a choice
You may not realise that the money in your super account doesn’t automatically form part of your estate. So, it’s important to tell your super fund who should receive your super and any life insurance if you die.
This is called nominating a beneficiary.
You can nominate your legal personal representative, to incorporate the money into your estate. Or you can nominate a specific eligible person or persons.
If you don’t make a nomination, your super fund may decide who gets your money. This might not match what you would have decided.
The amount of your super payable if you die includes:
- your super account balance
- an amount from any life insurance you held inside super
- any other amount the fund needs to pay (for example, interest added under the fund’s rules).
Types of super death benefit nominations
There are different types of nominations available. Not all super funds offer all types.
The four main types of nominations are:
Binding nomination (lapsing): The super fund must pay your super benefit to your nominated eligible beneficiary. These need to be renewed or changed every 3 years otherwise they expire.
Binding nomination (non-lapsing): The super fund must pay your super benefit to your nominated eligible beneficiary. These don’t expire.
Binding reversionary nomination: This can apply if you’ve turned your super into an income stream such as a pension. It’s like the non-lapsing nomination above, except the beneficiary can continue to get your super as an income stream, and in some cases you can’t change a reversionary nomination once it’s made.
Binding death benefit nomination: Each super fund can have different rules on when a binding death benefit nomination becomes invalid. These rules will be set out in the form you complete when you make a nomination. Binding nominations that are no longer valid are normally treated in the same way as a non-binding nomination.
Non-binding nomination: This guides your super fund trustee on who you want your super to be paid to, but the fund is not bound to follow these wishes.
A binding nomination requires the super fund to follow your instructions, while a non‑binding nomination guides the fund but still allows them to decide who receives your super.
Binding nominations can take a bit more effort to make but give you more certainty about who will receive your super. Having one can also speed up the time it takes to pay out your super.
Who can be a beneficiary?
No matter what type of nomination you make, there are some limits on who you can nominate as a beneficiary.
People super funds are allowed to pay your super to include:
- your current spouse or partner
- your children (of any age)
- someone in an
with you when you die
- anybody financially dependent on you when you die
- your legal personal representative (your estate).
You can nominate one or more people to share in your super death benefit (as long as they’re eligible). In most cases (except for reversionary), you can change your nomination whenever you want to.
The ATO has more information on superannuation death benefits. If you’re not sure of the best way to organise your superannuation death benefit, you may want to see legal advice.
How to nominate a beneficiary
You can contact your super fund to nominate or change a beneficiary
To nominate a beneficiary:
Check with your fund that you can make a nomination, and what types of nominations the fund allows.
Check how you need to do the nomination (whether it’s online, or by downloading a form).
Decide what type of nomination is best for you.
Make sure that the people you’re nominating are eligible to be paid your super.
If you plan to nominate your legal personal representative, make sure your will is up to date.
Read the instructions carefully and make sure you complete the application correctly, including any required signatures. Mistakes can make your nomination not valid.
Make sure you read the information the super fund provides about when your nomination might become invalid in the future. Lapsing nominations will automatically expire after a period of time (e.g. 3 years). Setting a calendar reminder can be helpful.
Regularly review your nomination and update it if your circumstances or wishes change. A good reminder to do this is when you get your annual statement from your super fund
