superannuation

How to safeguard your superannuation savings

There's a lot to know about superannuation but one of the most important things is making sure that you nominate the right beneficiaries.

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This is not your typical article about maximising your superannuation and consolidating it. This is about making sure you nominate a beneficiary on your superannuation account, so that your super is not wasted if you die.

Whether you are thinking about it or not, superannuation is one of your biggest assets, particularly if you add on the life insurance component to your death benefit if you died. On industry super funds, most people have at least $200,000 in life insurance.

However, your superannuation is not an estate asset to be dealt with under your Will. Instead, it is an asset held on your behalf by the trustee of your superannuation fund. The trustee is the one to determines who receives your superannuation after you die. So you need to make sure that the trustee knows who you want your superannuation paid to. 

Who can get my super?

The range of eligible people to receive a superannuation death benefit is limited by legislation and the trust deed. The legislation limits beneficiaries to a dependant of the member, or the member’s legal personal representative (the executor or administrator of your estate). A dependant includes:

  • your spouse,
  • any of your children, or
  • any person that you have an interdependent relationship with. 

You can also nominate for your superannuation to be paid into your estate, so that your Will can cover it.

But for all those young people who nominate their parents, or their brothers and sisters, these are not valid nominations, and the superannuation fund cannot pay the benefits to these people.

How do I nominate a beneficiary for my super?

A binding death benefit nomination can be used to tell your trustee where you want your superannuation paid after you die. This is a form that you can get from your super fund’s website. 

If you have not completed a binding death benefit nomination, the trustee may use its discretion to determine who will be the beneficiary of the superannuation death benefit.

Nominations expire

Unfortunately your super fund usually doesn’t make it clear how long they will be bound by your signed binding nomination form. On industry super funds, a binding death benefit nomination usually expires after three years, so you have to make sure that you keep it up to date. 

If your binding nomination has expired, it becomes non-binding on your trustee. So your trustee can again make their own decision about where your super death benefit should be paid. 

To make their decision, the trustee must determine all your current and ex-spouses, all your children, and anyone else you may be leaving with who is dependent on you.

The trustee will then look at the circumstances of each person, and the merits of paying all the benefit to one or another, or splitting the benefit between several potential beneficiaries.

There is the Australian Financial Complaints Authority (AFCA) if a potential beneficiary is overlooked, or a trustee makes a decisions that the estate or a beneficiary wishes to appeal. 

If I don’t have a spouse or children, what do I do?

If you don’t have a spouse or children, it may be best for you to make a binding nomination with your superannuation trustee to pay your superannuation death benefit into your estate, so your Will can say what to do with it. Then make sure your Will is up to date, and this can give you more control. 

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