Nominating beneficiaries can ensure that your super is distributed according to your wishes in case the worst happens.
Why you should nominate beneficiaries for your super – and how
You might be surprised to learn that you may not be able to direct the distribution of your super account by a Will. This is because it’s set up as a trust.
Fortunately, it’s a simple process to nominate beneficiaries for your super – and you can update them fairly easily.
There are two options for nominating the distribution of your superannuation benefits upon your death:
- A non-binding death benefit nomination.
- A binding death benefit nomination.
With a binding nomination, the trustee must pay your death benefits as you have nominated – but the decree must be renewed every 3 years. However, there are rules as to who you can nominate.
With a non-binding nomination, the trustee has full discretion to distribute the funds but will generally pay your death benefits as you have nominated.
Who can be a nominated beneficiary?
There are restrictions on who can be named as a beneficiary for your superannuation account:
- The legal personal representative (in which case the benefit is paid to the estate)
- A dependant :
- Spouse (including de facto)
- A child (including adopted, stepchild)
- Anyone the member has an interdependant relationship with that provides more than financial support.
A common mistake comes from nominating a sibling or parent; as there is usually no interdependant relationship.
What about a pension?
If you retire and transition your superannuation account to a pension account, you’re allowed to have your funds dispersed as a lump-sum or you can nominate a reversionary pension beneficiary. With a reversionary pension, your funds will continue to be paid out as normal.
A reversionary pension beneficiary can be:
- Your spouse or de facto partner
- A child (up to age 25)
- Someone in an interdependant relationship with you at the time of your death.
A child between the ages of 18-25 can only be nominated as a beneficiary if they are financially dependant on you at the time of your death or meet the disabled criteria of the Disability Services Act 1986.
If the pension is paid to a child between the ages of 18-25, the pension will be paid out until they turn 25 or the balance reaches 0. Once the child reaches the age of 25, the balance will be paid out in a lump sum.
How do I make a nomination?
To make a non-binding nomination or to alter the dependants on your benefits you can:
- Login to your member account
- Select ‘Your account’
- Select ‘Beneficiaries’
- Enter the new details.
- Download and complete the Nomination of beneficiaries form.
- This form can also be used to nominate a binding beneficiary.
Note: You must complete a nomination for each account you have with the fund.