Make sure your super goes to your loved ones

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While a Will states how you would like your hard-earned assets to be distributed, it doesn’t always include your super. That’s because, unlike directly owned property or shares, super doesn’t automatically form part of your estate. The super fund trustee will distribute it in accordance with super law and the fund’s trust deed and those decisions may not be what you had in mind.

That’s why it’s important to let your super fund know your wishes. Creating a valid binding death benefit nomination will bind the trustee to pay the death benefit according to your wishes.

A binding death benefit nomination is one of a variety of nominations – which legally allows you to advise or bind the trustee to pay your super benefit to who you want when you die, provided the nominees meet certain eligibility criteria.

The table below outlines a brief summary of the nominations available in IOOF Personal Super, IOOF Employer Super and IOOF Pension. We recommend you read the Estate Planning section of the IOOF General Reference guide (IOF.02) for further details.

Type of nomination

Description

PositivesLimitations
No nomination

The trustee must pay the super benefit to the estate.

 No need to renew nominations. There is a chance your super benefits could go to someone you didn’t intend them to go to.
Non-binding death benefit nomination You can tell the trustee who you want your super benefits to go to. It will be considered by the trustee, but is not binding. The trustee can still exercise discretion which may suit you if your situation has changed since you originally made the nomination. The trustee will ultimately make the decision as to where to pay your super benefits, which could include someone you didn't intend them to go to.
Binding death benefit nomination The trustee must pay super benefits to the nominated dependants and in the proportions you set out. The trustee must pay benefits in accordance with your nomination. Your nomination must be renewed every three years to remain valid.

Who can you nominate as a beneficiary?

There are government regulations around who can receive a superannuation benefit – it’s not whoever you wish. The beneficiary must be a ‘dependant’*.

A dependant is:

  • a spouse or de facto spouse
  • children of any age, including step-children, adopted or children from previous relationships
  • someone who is financially dependent on you
  • someone in an interdependency relationship with you (a person who you live with, have a close personal relationship, and where one or both provides the other with financial support and domestic and personal care).
Case Study

Joan is single and loves spending time with her nieces and nephews. Joan also dedicates a lot of her free time to helping her elderly parents. In the event of her death, Joan wants to make sure that her super is split so that her parents get half, while the other half is paid to her two brothers.

Her parents and brothers are not dependants under the government rules. For this reason, Joan can’t make a death benefit nomination directly to them. However, Joan is able to make a binding death benefit nomination to her ‘legal personal representative’ so her super benefits are included as part of her estate and are expressly dealt with via her Will.

To make sure her estate is dealt with in accordance with her wishes Joan arranges for her lawyer to draft her Will accordingly.

There’s more to know about death benefit nominations – including tax implications for your beneficiaries. That’s why we recommend you speak to a financial adviser before you take any action.

If you'd like to make a binding death benefit nomination, all you need to do is fill in a short form.

If you have any questions, please call us on 1800 333 500.

* In this article a dependant refers to a ‘SIS dependant’ which is an eligible person under the Superannuation Industry (Supervision) Act 1993 that a member may nominate as a beneficiary.

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