Can I nominate beneficiaries for my superannuation?

Why Nominate Beneficiaries for Your Super?

Superannuation operates differently from your regular assets. Unlike your house or car, super is held in trust for you by your super fund’s trustee. Your will, which dictates the distribution of your estate (possessions), doesn’t automatically control who receives your super.

Here’s why nominating beneficiaries is vital:

Control Distribution: By making a valid beneficiary nomination, you ensure your super goes to the people you choose, rather than leaving it to the discretion of the super fund trustee.
Peace of Mind: Knowing your super savings will be used as per your wishes brings peace of mind.
Avoiding Delays: A beneficiary nomination streamlines the process, expediting the distribution of your super to your loved ones.

Who Can Be a Beneficiary?

Australian superannuation law dictates who can be nominated as a beneficiary. Here are the eligible candidates:

Spouse/Partner: This includes your legal spouse or de facto partner.
Children: This encompasses biological, adopted, stepchildren, and even ex-nuptial children.
Financial Dependants: Anyone financially reliant on you at the time of your death can be nominated.
Interdependent: This refers to someone in a close and ongoing relationship with you, with a degree of financial interdependence.
Legal Personal Representative (LPR)/Estate: You can nominate your LPR, often the executor of your will, to receive the super. This allows your will to determine the final distribution.

Important Note: Not all super funds allow nominating friends or other non-dependent relatives as direct beneficiaries.

Types of Beneficiary Nominations

There are two primary types of beneficiary nominations in Australia:

Non-Binding Nomination: This is the most common option. It expresses your wishes but isn’t legally binding on the super fund trustee. The trustee will consider your nomination but may exercise discretion in special circumstances (e.g., if the nominated beneficiary is deemed unsuitable).
Binding Nomination: This option, subject to your super fund’s rules, legally obliges the trustee to distribute your super according to your nomination, provided the nominated beneficiary is eligible under super law. Binding nominations offer greater control but may require specific forms or witnessing.

Reversionary Nominations (for retirement accounts): This nomination applies only to certain retirement income streams, like account-based pensions. It specifies who receives ongoing payments upon your passing. Only eligible beneficiaries (excluding your LPR) can be nominated for a reversionary pension.

How to Make a Beneficiary Nomination

The process for nominating beneficiaries varies depending on your super fund. Here are some general steps:

Check your super fund’s website or member resources. Most funds offer downloadable nomination forms or online nomination options.
Review the nomination booklet or online information. This will explain the available options (binding/non-binding) and eligibility criteria.
Complete the nomination form accurately. Ensure all details (your information, beneficiary details, and desired percentages) are correct.
Submit the form as per your super fund’s instructions. This may involve mailing the form, submitting it online, or lodging it at a branch office.

Updating Your Nomination: Your circumstances and wishes may change over time. It’s crucial to update your beneficiary nomination if your marital status changes, you have new dependents, or your preferred beneficiaries change. Follow the same process as above to update your nomination.

Conclusion

Taking the time to understand and complete a beneficiary nomination for your superannuation is a wise decision. It ensures your hard-earned savings reach the people you care about most after you’re gone. Remember to check your specific super fund’s guidelines and update your nominations as needed to maintain control over your super’s ultimate destination.