Superannuation and the financial ties that bind

By Greg Major*, BA (AsSt) BE (Hons) MBA, GAICD FFIN FAIM, Director, Blueprint Wealth

They say, only one thing in life is certain.  And while we would rather plan our next holiday than consider what’s going to happen when we die, it is one inevitable event that we should all plan for.

When someone dies, it’s a very difficult time for all the family.  A Will provides some assurances as to how our money will be distributed.  But what about superannuation?  For many people, their superannuation investment represents one of the largest portions of their assets.  Therefore, it makes sense to ensure it is appropriately allocated to loved ones, without causing delays and confusion.  Here’s what you can do:

Update your details

It’s wise to spend some time deciding who you want your superannuation benefits to go to when you die, and then ensuring those wishes are properly reflected in your fund arrangements.

Secondly, make sure that you update any details with your super fund if your circumstances change. Marriage, divorce, the birth of a child or the death of a beneficiary are all life events that may cause you to want to update your details.


Super fund trustees usually pay death benefits to one or more of your dependants or to your estate.

Dependants include a spouse (including de facto partners), your children and/or your spouse’s children, and anyone who was financially dependent on you.

They also include anyone with whom you had an interdependency relationship.  This covers people who (related or not) live together and provide each other with financial or domestic support or personal care.

The money can also be paid to your legal representative or executor of your estate.

If you choose not to nominate any beneficiaries, your super fund’s trustees will typically use their discretion to allocate the benefit. In many cases this is straightforward. However, those involving ex-spouses or competing claims by family members can sometimes become drawn out.

Binding or non-binding nominations

Most super funds allow you to choose from binding or non-binding nominations of dependants which you can change at any time.

A non-binding or preferred beneficiary nomination acts as a guide for the trustees. In many cases your nominated beneficiaries will receive your benefit but the trustees have the final say. This can be the case if, for example, you nominate someone who does not meet the definition of a dependant.

Non-binding nominations do not expire so it is wise to review them regularly.

A binding nomination is a written direction to fund trustees and gives them no discretionary power, providing your nomination is valid.

This nomination requires more careful management; it must be made in writing, signed in the presence of two witnesses who are not beneficiaries, and generally be renewed every three years.

Regular reviews

A regular review is critical to ensure your beneficiary nomination keeps up with the changes in your life.

In some cases a binding nomination might be invalid if one of the nominated beneficiaries no longer meets the legal definition of a dependant.

If you opt for a binding nomination your super fund will provide you with additional information when you receive your annual statement. This includes the names of nominated beneficiaries, information about how such nominations apply, a statement on how to amend the nomination and the date on which it must be renewed to remain valid.

It’s worth noting that there could be tax, pension or Centrelink implications for beneficiaries, so it pays to discuss your plans with them, and also seek the advice of a financial planner.

At Blueprint Wealth we offer financial advice that’s right for you, no matter what stage of life you are at. Contact us today to set up a plan that is right for you.

Greg Major is an Authorised Representative of AMP Financial Planning Pty Ltd, ABN 89 051 208 327, AFS Licence No. 232706.

Any advice given is general only and has not taken into account your objectives, financial situation or needs.  Because of this, before acting on any advice, you should consult a financial planner to consider how appropriate the advice is to your objectives, financial situation and needs.