Article

Choosing a beneficiary

Super and investments 101 | Date Posted: 14 June 2024

Although not everyone’s favourite topic, it’s important to think about what happens to your assets when you pass away. And that includes who’ll receive your super or pension benefit. Fortunately, when it comes to super, you can nominate who you want to receive your benefit, however, it’s not set and forget! In this article we shine a light on the top five questions when it comes to choosing your beneficiaries.

family image1. Who can be my beneficiary?

When choosing beneficiaries, it’s important to think about who you’d need to financially support in the event you pass away. For most people, this is their spouse or children. You should be aware that you can only nominate your dependants or a Legal Personal Representative (i.e. the executor of your estate). You can read more about this in the Nominating Beneficiaries factsheet.

Important tip: By law, superannuation isn’t automatically considered part of your estate. One way to ensure your benefit is paid to the people you choose, is to nominate the executor of your estate as a binding beneficiary. Then, if you include the relevant provisions in your will, your super will be distributed according to your wishes.

2. Can I nominate more than one beneficiary?

You can split your benefit among multiple beneficiaries, as long as the total percentage adds up to 100 percent.

3. What’s the difference between a binding and a non-binding nomination?

If you have a super account, you can nominate your beneficiaries in two ways; a binding or non-binding nomination. If you choose to make a binding nomination (and complete the relevant form correctly) your nomination will be binding. This means we must pay your benefit to the beneficiaries you’ve nominated when you pass away, as long as they meet the definition of ‘dependant’ under superannuation law (at the date of your death) or are your Legal Personal Representative.

Remember, binding nominations will remain in place for three years and will need to be renewed before it ceases. We’ll remind you when it’s time to do this.

You can also make a non-binding nomination. In that case, we’ll consider your nomination but it won’t require us to pay your super to those you nominate. This is because there are other things we need to consider, such as the financial circumstances of your dependants. This might include whether or not they would have expected you to continue providing for them financially.

Please note, pension account holders can only make a binding nomination.

Did you know? Non-binding nominations can also be managed via your online account.

4. What if I don’t have a nominated beneficiary?

If you don’t have a binding beneficiary nomination and have a super account, your super fund determines how your super is distributed if you pass away. In most cases, the people your super fund can choose to receive your super include your estate, spouse, child/ren, the person you’re in an interdependent relationship with or financial dependants.

If you have a pension account and don’t have a binding nomination, your benefit will be transferred to your spouse if you pass away. If you don’t have a spouse, your pension will be paid to your dependants or Legal Personal Representative.

5. How do I need to get my form witnessed?

If you want to make a binding nomination, two people who are over the age of 18, and who are not the beneficiaries you’re nominating on the form, must witness you sign your declaration. They must also sign and date the form at the same time as you. It’s also important to read the form carefully and make sure you answer all of the questions. Some common mistakes include:

  • Not signing the form
  • The witness is a beneficiary
  • The benefit percentages do not add up to 100%
  • Sending a scanned or photocopied version of the form, rather than the original

Case studies

Nominating a beneficiary can help make sure your benefit, including your account balance and any insurance cover you’re entitled to goes where you want it to if you were to pass away. The below examples show a number of scenarios of how a super death benefit may be distributed based on whether a valid binding or non-binding nomination was in place. 

Simon, 62 years old
Simon is married to Elizabeth and together they have two adult children. Both of their adult children are single parents on a tight budget who are renting, so Simon and Elizabeth are helping them out by giving them money to pay for school fees.

Simon has made a non-binding nomination to Elizabeth as he wants his super to go to her in the event he passes away, so she can pay off the mortgage. Sadly, Simon falls ill and passes away. 

Outcome: By law, spouses are considered financial dependants. But because Simon’s nomination was non-binding, the Trustee determines that the two adult children are also beneficiaries, because Simon provided ongoing financial support to them. This means the death benefit is shared between Elizabeth and her two children.

Had Simon made a binding nomination, then the full benefit would have been paid to Elizabeth. 
Barbara, 58 years old
Barbara is a single mother of two adult children who no longer live at home. Barbara’s husband and father of her two children passed away many years ago. Barbara has made a binding nomination naming her daughter Sarah and son Michael as equal beneficiaries. Michael is diagnosed with cancer and passes away. A few months later, Barbara suffers from a heart attack and also passes away.

Outcome: Sarah assumes she will now receive the full super benefit from her mother, given her brother is no longer alive. However, Barbara’s binding nomination became invalid when her son Michael passed away. The Trustee will now assess the claim on the basis there is no nomination in place and will determine potential beneficiaries in line with the relevant laws. 

Bob, 74 years old 
Bob lives together with his long-term partner Karen and has an adult son from a previous marriage. Bob has not nominated a beneficiary for his super as he left instructions in his will, which he thought would be sufficient. In his will he stated that his super should go to his son Paul. Bob is involved in a car crash and dies suddenly. 

Outcome: Because instructions about super in a will are not binding, the Trustee may use the will as a guide but may decide Bob’s super should go elsewhere, in line with the relevant laws. In this case, the Trustee determines that Karen as Bob’s de facto partner qualifies as a dependant and that Paul is not a financial dependant as he did not rely on Bob for financial support. The full super benefit is paid to Karen and Paul receives nothing.

What to consider

Updating your beneficiaries is one thing, but the challenge is remembering to do so! It’s a good idea to review your superannuation beneficiaries at least once a year to make sure you’re still comfortable with who you’ve listed. Whenever you or your beneficiaries have a change in circumstance you should consider cancelling or updating your nomination. For example, getting divorced or married, or the death of a loved one may cause you to reconsider your beneficiaries.

NOTE: Binding nominations lapse after three years. This means you need to update your binding nomination every three years whether your circumstances change or not. We’ll remind you when it’s time to do this.

Manage your beneficiaries

To manage the beneficiaries on your Mine Super account, download the Nominate your beneficiaries form and complete all details. 

Or, to make a non-binding nomination, go to your online account. But remember, this is only possible for super accounts as pension account holders can only make a binding nomination.