What is a beneficiary nomination?

If you have a super fund, it’s likely that you’ve seen a beneficiary nomination form before. But what does it do, and who should you nominate? 

​Why it matters
Super isn’t automatically included in your estate. This means that it may not necessarily be distributed according to your will. Instead, your super fund makes the decision on who or where your super is distributed.

Nominating a beneficiary:

• Gives you control of your super
• Prevents your super being paid to the wrong party
• Aids in avoiding legal uncertainty, which can delay payments
• Makes an already difficult time easier for your loved ones

Types of Beneficiaries
There are three main beneficiaries

1. Binding Nomination: If valid when you pass away, your super fund must pay it to the dependant(s) you have nominated.
2. Non-binding Nomination: This tells your super fund where you’d like your money to go, but they have no legal obligation to follow your wishes. These do not expire. 
3. Revisionary Nomination: This is used if you have an income retirement account. It allows a dependent to continue to receive your income payments. These usually do not expire. 

Binding nominations can be either lapsing or non-lapsing:
Non-Lapsing: These do not expire unless you submit a new nomination.
Lapsing: These typically last three years, after which you will need to re-complete your nomination.

Who can be nominated?

1. Your spouse or de facto partner
2. Your children (of any age)
3. Your financial dependant (someone who depends on you for financial support)
4. Someone in an interdependency relationship with you (someone you live with and provide mutual financial and personal support)
5. Your estate (sometimes called your legal personal representative) which is the executor of your estate. They distribute your estate according to your will, if you have one.

Will my beneficiary be taxed?
The tax treatment of a superannuation death benefit depends on a few factors:

• Your beneficiaries relationship to you at the time of your passing (e.g. child, spouse, etc)
• If the money is paid as a lump sum or income stream
• The tax-free and taxable portions of your super balance
• The age of your beneficiary at the time of your passing
• Your age

Dependents typically do not need to pay tax on death benefits if they receive it as a lump sum, though you should always consult a licensed tax professional if you are uncertain.

Income streams may trigger different tax rates depending on the above factors.

Non-dependents can only receive a lump sum and are required to pay tax, though they may be entitled to a tax offset.

How do I nominate a beneficiary?
You can request the form from your super fund or contact your financial adviser to arrange for it to be updated. Some super funds allow you to make a nomination online. 
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You can learn more about nominating beneficiaries here.