July 4, 2023

The answer, as any good lawyer will tell you, is “it depends”! What it depends on, firstly, is the type of super you have.

If you have a ‘Defined Benefit’ fund which pays you an indexed pension, there are usually provisions in the Trust Deed of the super fund which provide for some proportion of your pension to be to be paid to your spouse when you die. You would need to enquire of your fund as to its specific provisions.

If you have an “Accumulation” fund (which accumulates your super contributions into a lump sum on which you can draw down by lump sum or pension), then it will depend on any nominations that you make. This includes self-managed super funds.

You may make no nominations at all in which case your super can be paid out by your trustees in accordance with the terms of the super fund Trust Deed. Most commonly, such deeds allow the super trustees to decide to pay it out upon claims by one or more of your dependents or co-dependents in such shares as super trustees see fit, or to pay it out to your executor to be dealt with under your Will (or to your administrator on intestacy if you have no Will). But you may wish to have more say in where it goes, in which case you can consider the following options.

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 Most funds allow you to make a Death Benefit Nomination saying which of your dependents or co-dependents that you would like to benefit and in which percentages or whether you would like some part of it paid to your executor/administrator to be dealt with under your Will/intestacy. What many people do not know is that this type of nomination is not binding on the super trustees and they could still pay out some or all of the funds to an alternative claimant who is your dependent or co-dependent or to your executor/administrator.

Many funds will also allow you to make a Binding Death Benefit Nomination. This is basically the same as the Death Benefit Nomination above, but it is binding on the super trustees. However, it is important to note that this type of nomination has to be completed on the proper form provided by the super fund and must be signed, witnessed and dated in accordance with their requirements otherwise it won’t be valid.

 In addition, if your accumulation super is being paid as a pension, it may be possible with your fund to nominate a “Reversionary Beneficiary” who receives the pension when you are gone. There are some complicated calculations to work out whether it is better for you to make a Nomination or name a Reversionary Beneficiary so you should talk to your accountant or financial advisor before making this decision.

 Finally, it is important to know that this is not necessarily a “set and forget” decision. Many funds require you to renew your nominations every three years, so you should check on this and diarise the date for updating your nomination. Some super trust deeds may dictate that nominations lapse if the member marries or divorces so you should review your arrangements upon such events.