Who gets your super when you die

The kinds of nomination

A binding nomination requires the fund to follow your instructions; a non-binding one guides the fund but still leaves the decision to it. Funds can offer different nomination options, so the ATO says to ask your own fund what applies to your account.

Death benefit nominations as Moneysmart and the ATO describe them

Nomination	What it does
Binding, lapsing	The fund must pay your benefit to your nominated eligible beneficiary. The nomination has to be renewed or changed every 3 years, or it expires.
Binding, non-lapsing	The fund must pay your benefit to your nominated eligible beneficiary, and the nomination does not expire.
Binding reversionary	Can apply once your super has been turned into an income stream, such as a pension.
Non-binding	Guides the trustee on who you want the super paid to, but the fund is not bound to follow it.
None made	The fund may decide who gets the money, which might not match what you would have decided.

Where a fund’s rules allow a binding nomination, the ATO says it can name one or more of your dependants, your legal personal representative (the executor of your estate), or both. Nominating your legal personal representative brings the money into your estate; the alternative is to nominate a specific eligible person or persons. With a non-binding nomination, or none, the trustee may use its discretion to decide which dependant or dependants receive the benefit, and may also pay your legal personal representative to distribute it according to your will.

Making a nomination that holds

A binding nomination takes a little more effort to make, Moneysmart says, but gives more certainty about who receives your super, and it can speed up the payout. Each fund can have its own rules on when a binding nomination becomes invalid, set out in the form you complete, and a binding nomination that is no longer valid is normally treated as a non-binding one. Moneysmart also warns that mistakes in completing the form, missing signatures included, can make a nomination invalid.

In most cases, except a reversionary nomination, you can change your nomination whenever you want.

Who can be a beneficiary

Whatever kind of nomination you make, there are limits on who can be nominated. You can nominate one or more people to share the death benefit, as long as they are eligible.

A lump sum or an income stream

The ATO says a death benefit paid to a dependant can be a lump sum or an income stream, and one paid to someone who is not a dependant must be a lump sum. A super income stream is regular payments, at least once a year, from a retirement account. A child can receive one only if under 18, or under 25 and financially dependent on the person who died or with a permanent disability. An adult child with a permanent disability can keep receiving an income stream after turning 25; in every other case, the ATO says, it has to be converted into a lump sum no later than the day the child turns 25.

Life cover held through super follows the same path: the fund pays any insurance benefits as part of the super death benefit. If no beneficiary has been named, Moneysmart says, either the estate or, for insurance through a super fund, the super trustee decides where the money goes. Insurance through super covers when that life cover starts and ends.

Objecting to a trustee’s decision

ASIC’s guide to internal dispute resolution sets out the timeline for a death benefit, under section 1056 of the Corporations Act:

1. A proposed decision

   The death benefit decision-maker may first gather information, then propose a decision on how and to whom the benefit will be paid. Notice of the proposal goes to all potential beneficiaries.

2. 28 calendar days to object

   The notice explains that potential beneficiaries may object to the proposal within 28 calendar days of receiving it.

3. Up to 90 calendar days for a response

   Where someone objects, the 90-calendar-day maximum timeframe for the internal response begins when the 28-day objection period ends.

4. A time limit for AFCA

   Where a complaint is about how a death benefit was distributed, the decision-maker must also tell the complainant about the 28-calendar-day time limit, under section 1056, for lodging a complaint with the Australian Financial Complaints Authority (AFCA).

Moneysmart describes AFCA as an independent dispute resolution scheme for disputes with financial firms; its page on how to complain explains the steps.