Superannuation – Check Your Beneficiaries!

Superannuation is a tax effective way to build your wealth for your retirement.

Under superannuation law, you are only permitted to nominate a superannuation dependant or dependants (at the time of your death) or your estate, to receive your superannuation death benefit and any associated life insurance held within that fund.

Despite this directive, there are still instances where individuals mistakenly believe they may direct their superannuation death benefit to anyone of their choosing. This is not the case under current legislation.

Who Qualifies as a Superannuation Dependant?

• The member’s spouse or partner (including de facto relationships);

• The member’s child (of any age), which includes adopted children, stepchildren, and children born after the members death;

• Any person who is wholly or partially financially dependent on the member at the time of death, regardless of family relationship; and

• A person who shared an interdependency relationship with the member at the time of death.

If you do not have any superannuation dependants, you must nominate your estate to receive your superannuation death benefit. Provided a valid Will is in place at the time of your death, the benefit will then be distributed according to the terms of your Will.

Frequently Asked Question: Can My Parents Be Nominated as Superannuation Death Benefit Beneficiaries?

Unless you maintained an interdependency relationship with your parents at the time of your death, you cannot directly nominate them as beneficiaries of your superannuation death benefit. To ensure your parents receive this benefit, you must nominate your estate and then specify in your Will that the superannuation death benefit is to pass to your parents.

How to Nominate Beneficiaries

There are two primary nomination options:

• Binding Nomination:

A valid Binding Death Benefit Nomination, if current and compliant with your superannuation fund's trust deed and relevant legislation, obliges the trustee to distribute your superannuation death benefit according to your stated wishes.

• Non-Binding Nomination:

With a Non-Binding Death Benefit Nomination, the trustee will take your preferences into account but retains final discretion over which eligible beneficiaries and/or your estate, and in what proportions, receive the death benefit.

What If No Nomination Is Made?

Should you fail to make a specific nomination, the trustee has discretionary authority to determine which superannuation dependants and/or your estate, and in what proportions, will receive your superannuation death benefit.

Case Study

Jane is single and enjoys close relationships with her siblings and parents. She would like her superannuation benefit to be divided equally, with half allocated to her parents and the remaining half to her siblings. Since her parents and siblings are not classified as superannuation dependants, Jane cannot nominate them directly. Instead, she nominates her Legal Personal Representative (i.e. her estate) via a binding death benefit nomination and arranges for her Will to specify her desired distribution.

Next Steps

To ensure your superannuation beneficiaries are correctly nominated:

• Review your superannuation fund’s beneficiary nomination options to ensure suitability for your personal circumstances;

• Confirm that those you are nominating qualify as superannuation dependants and/or your estate;

• If nominating your estate, verify that your Will is up to date and accurately reflects your intentions; and

• If your death benefit nominations lapse, regularly review and renew them as required.