Choosing a beneficiary
What is a beneficiary?
A ‘beneficiary’ is a person you nominate to receive your superannuation benefits (death benefit) if you die.
How to nominate a beneficiary
To make sure your super fund knows what you’d like to happen to your super after you’re gone, you can choose a ‘beneficiary’. Generally, your beneficiary must be a dependent (see the After death page).
Your super fund should give you the option to nominate a beneficiary. Most funds ask you to do this by filling in a simple form during the application process, although you can often do this through your fund’s website. You can nominate more than one person – you just need to specify the percentage of your benefit that you would like each person to receive. This nomination can be either binding or non-binding.
Non-binding nominations
If you make a non-binding nomination, the trustee of your super fund will make a decision about who to pay your death benefit too, but it is also legally obliged to determine who your dependents are and any other relevant considerations at the time of your death. Your benefit will be paid to those considered to be financially dependent on you and, in some cases, this will not be the person or people nominated.
Binding nominations
If you make a binding nomination, the trustee of your super fund is required, by law, to pay your benefit to the person/s you have nominated when you die, as long as the nomination is valid at the time of your death. Binding nominations generally only remain valid for three years.
Not all funds offer binding nominations, so you should check with your fund. This information can usually be found on the fund’s website and in their product disclosure statement. If you’re thinking about making a binding nomination, contact your fund for more information, as it must meet certain conditions to be considered valid. Generally, if you have no dependents eligible to receive your benefit and do not make a nomination, your super benefit will be paid to your legal personal representative for inclusion in your estate.
For more information about types of nominations, including why you would choose each type of nomination, see our What happens to my super when I die? factsheet.
What happens if I make no nomination?
If you don’t nominate someone, the trustee of your fund will decide who receives your death benefit. The trustee has to pay your benefit either to one or more of your dependents or to your estate for distribution according to your
will (or both).
Changing beneficiaries
To make sure your beneficiary nominations stay valid and effective, it’s important to make sure your beneficiary nominations are up to date. It’s a good idea to review the information you’ve given your fund when your personal circumstances change, for example when you get married, divorced, have new children or grandkids come along or someone in your family dies. Sometimes people can forget to add their youngest child or new partner as beneficiaries and it can cause problems after their death. Others might forget to get around to removing their ‘ex’ as a nominated beneficiary and they may end up getting some of their super benefits after they die.
You can usually change your nomination at any time by writing to your fund.
What happens if I am a beneficiary?
Dealing with super may be the furthest thing from your mind after the death of someone close to you, so it’s good to know that, usually, if you’re named as a beneficiary, you don’t need to do anything – the trustee of the relevant super fund will get in touch with you, if they have or can find your address. If you’re directly related to the super fund member that has passed away, you might be able to help the process by making sure the trustee has a copy of the person’s death certificate – although a legal representative will usually do this – and letting them know of any dependents you’re aware of.
When a member of a super fund passes away, the process of paying their super benefit to their beneficiaries/dependents or their estate can be straightforward or it can be complicated and lengthy, depending on the personal circumstances of the deceased person. If there is a binding nomination, the trustee will pay the benefit to the person or people nominated. In other cases, the trustee of their super fund will begin by identifying all potential beneficiaries, then they will decide who to pay the benefit to and how much to pay each person, so that it is ‘fair and reasonable’. Usually, the claims of a spouse and young children get priority over the claims of adult children who are not financially dependent on the person who has passed away. If there are young children involved, the length of time they would have remained dependent on the super fund member is taken into account.
If you’re unhappy with a decision made by a super fund about how much you receive as a beneficiary, you need to contact the internal complaints section of the relevant super fund. If you are still unhappy after that, you can apply to the Australian Financial Complaints Authority (AFCA) for a review of the super fund’s decision.