Superannuation Death Nomination

Who decides what happens to your superannuation when you die?

On death, superannuation benefits are normally paid directly to nominated beneficiaries and bypass the estate. The trustee of your super fund decides who gets your superannuation unless you have made a valid ‘Binding Death Benefit Nomination’.  Binding nominations provide greater certainty as to who receives your super benefits.

A common mistake is a misunderstanding of the nominated beneficiary within super funds. You can only nominate beneficiaries who, according to Super legislation are defined as dependants. Be careful who you nominate and check with your financial adviser that you have made a valid Binding Nomination.



Unfortunately most people forget to keep their binding nominations up to date or forget to update new spouses and children. You can’t rely on common sense to sort this out after you die.  Binding nominations are usually only valid for three years, so you need to ensure this is reviewed regularly.

Superannuation Pensions

A common trap with superannuation pensions (which are essentially tax free entities), is to assume that those assets will always be tax-free. In reality, on death, if a superannuation pension is paid as a lump sum to a financially non-dependant, tax at up to 16.5% can apply. Depending upon the superannuation structure, CGT may also become applicable. This has the potential to become a costly matter and an unpleasant surprise for loved ones.

Often with superannuation pensions most people nominate their spouse to receive a reversionary pension. This means the pension payments will continue to be paid to the surviving spouse until their death or when the funds run out.  

The nomination of beneficiaries should be made in the context of your Estate Planning. This should include the way superannuation death benefits are taxed when paid to dependants.