Certainty for your super

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit for more information.
Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit for more information.

AS our system of employer paid superannuation continues on, many working Australians will amass a significant super nest egg over their working life. It's important to have certainty over who inherits your super savings if you die prematurely because super cannot be bequeathed to loved ones in the same way as your home or other assets.

Australia has a vast pool of superannuation savings, currently estimated to be worth around $1.3 trillion. We often assume that our super will form part of our estate when we die and that the cash will be distributed in line with our will. But super doesn't work this way.

Unlike other assets that make up our personal estate, your super cannot always be passed on through your will.

Strictly speaking, the trustee of your fund can decide who receives your super if you die, and the trustee's decision may not reflect your wishes.

To be quite sure about who inherits your super, it's worth asking your fund about making a 'binding death benefit nomination'. It's an option many funds offer at no charge.

Binding nomination give you the certainty of naming those dependents you would like to receive your accumulated superannuation.

The key word here is 'dependents', and this normally means your spouse or partner (including a same sex partner), your children or someone else who is financially dependent on you at the time of your death. You can also nominate a legal representative, which for most people is the executor of their estate.
You can choose to split the money between your dependents as you see fit. But it's important to specify exactly how you want the money divided up.

If you don't have a binding nomination, your fund trustee can divide your super savings in the way that it believes is fair.

Unfortunately, making a binding death benefit nomination isn't a set and forget matter. These nominations are only valid for three years so it will need to be updated reasonably regularly.

That's not always a bad thing as our circumstances can alter and you could have a change of heart about who you'd like to inherit your super.

You can adjust your binding nomination at any time but remember, if the nomination expires your trustee may pay out your nest egg as if you had never entered a binding nomination at all. That said, your fund should send you a renewal notice when the nomination is about to expire.

As with many aspects of superannuation, there can be varying tax implications for super payouts received as an inheritance. That makes it worth speaking with your financial adviser or lawyer before making a final decision regarding a binding death nomination.

Organising a binding nomination is a matter of filling in a form provided by your fund, and in many cases you can download the necessary paperwork from your fund's website.  It's worth the effort for the certainty it gives you and your family, and along with having a valid will, it's something that plays an important role in your estate plans.

Paul Clitheroe is a founding director of financial planning firm ipac, chairman of the Australian Government Financial Literacy Board and chief commentator for Money magazine. Visit for more information.

Topics:  clitheroe superannuation

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