Nominate who gets your pension when you die
Your super cannot be included in your Will unless you've specified certain instructions with your super fund first. Find out how to nominate beneficiaries for your super death benefit and the essential differences between binding, non-binding and reversionary nominations. It's never too early to take control over how your super benefits will be distributed when you die.
In the event of your death, your super fund must pay out your account based pension to one or more people in your life who are eligible.
Your eligible beneficiaries might include your spouse (including de facto and same-sex partners), your children, anyone financially dependent on you, or your legal personal representative.
It's important to know your account based pension can't be included in your Will unless you've specified certain instructions with your super fund first.
There are three types of nominations you can make to ensure your retirement savings benefit the people you want them to: binding, non-binding and reversionary.
Binding and non-binding nominations
A binding nomination is a binding direction in writing from you to your super fund that tells them to pay any death benefit to your nominated beneficiaries.
Contrary to its name, a binding death benefit nomination only lasts three years before it lapses. If you decide to make a binding nomination, it's your responsibility to keep the nomination up to date.
Your super fund can and should let you know when a nomination is about to expire. In the instance that you forget to renew a nomination, it will lapse and become non-binding.
Under a non-binding nomination, the trustee of your fund gets the final say over who receives your super death benefit. They'll usually take your nomination of beneficiaries into account but are not bound to follow it.
Your super death benefit will generally be paid as a lump sum unless you select a reversionary beneficiary, in which case it will be paid as an income pension stream to that person.
A reversionary nomination only counts when you are already receiving a retirement income pension. In effect, it's a way of telling your super fund that you want your pension to continue but be paid to someone else.
You can only nominate one person as a reversionary beneficiary. Only spouses, certain children and dependants are eligible, and there's no opportunity to pay any other beneficiary.
A child can be a reversionary beneficiary if they are:
- under the age of 18
- aged 18–25 and financially dependent, or
- have a disability as outlined in the Disability Services Act.
If your reversionary beneficiary is a child, they can only receive your pension as an income stream until they turn 25. At this time, they must convert the remaining pension into a tax-free lump sum, unless they live with a disability.
A valid reversionary beneficiary nomination is binding.
How to make nominations
When you die, you won't have any control over what happens to your super or account based pension, so it's crucial to make the right beneficiary arrangements now.
Check those you are nominating are eligible and make sure your super fund offers beneficiary arrangements that you're comfortable with.
During the pension application process, you will be asked to nominate your beneficiaries when completing the application form. If you wish to make a reversionary nomination, you must make it at this time.
A binding nomination must be made in writing. It can be changed at any time, but must be reviewed and renewed every three years.
A non-binding nomination can be made or adjusted online or in writing.
If you want to change your reversionary beneficiary, you will need to cancel your existing pension and commence a new pension. Please note, this may have important implications for Department of Human Services payments and benefits, such as the Age Pension.