What happens to your super when you die - choosing a beneficiary

18 April 2024

Your super savings are a key investment for your future. It’s your money, and you’ve worked hard for it. But, that money needs to go to someone if you die. Your beneficiary is the person you nominate to receive your superannuation death benefit.  

We know it can be hard to think about, but it’s important to be aware of your options before you nominate a beneficiary.

On this page:

• Why you should nominate a beneficiary
• Who you can nominate as your beneficiary 
• Types of nominations 
• Beneficiary payments and tax
• Check or update your nominations

Why you should nominate a beneficiary 

Deciding who gets your super is important. Unlike other assets, your super and any insurance benefits in super you have aren’t considered part of your estate. That’s because your super is legally considered to be held in trust until you are eligible to access it. That's why choosing a beneficiary now could save putting that responsibility on your loved ones if the unexpected occurs.

If you don’t nominate a beneficiary, your super fund will follow relevant laws to decide who receives your balance. This could be either one or more of your dependents, or your legal personal representative. Nominating a beneficiary now can provide clarity about who you want to receive your super if you die and help avoid arguments between your loved ones.

Who you can nominate as your beneficiary 

Your beneficiary could be:

• your spouse or de facto partner
• one or more of your children
• interdependents (someone who lives with you and shares a close personal relationship where one or both of you provide financial and domestic support, and personal care of the other)
• other financial dependents (someone who relies on you financially)
• your legal personal representative.

You can learn more about dependants on the Australian Taxation Office (ATO) website. 

If you’re not sure who to nominate as your beneficiary 

If you’re not sure who to nominate, you could consider nominating your legal personal representative, then use your will to determine how you’d like the proceeds of your superannuation to be paid.

For example, if you wish to nominate a parent or financially-independent sibling, you could make a binding nomination to your legal personal representative and then instruct them on how to divide your super through your will. 

For tax purposes, a legal personal representative is not considered a financial dependent. So in these circumstances, tax will need to be paid on your super balance. 

Types of nominations 

Most super funds, including AustralianSuper, let you nominate a beneficiary as either a: 

• binding nomination, or 
• non-binding nomination, or 
• reversionary nomination. 

Just note that only people who’ve opened an account based pension or a TTR Income account can make reversionary nominations. 

Binding nomination

With a binding nomination, your super fund is legally obliged to pay your account balance to your chosen beneficiary – as long as your nomination is valid and in force at the time of your death.  

This will normally be as a one-off payment, but in some cases it may be paid as a regular income stream.

Binding nominations are only valid: 

• for a maximum of 3 years before your death, and
• if all individuals nominated are eligible at the time of your death. 

That’s why it’s crucial to review and renew binding nominations often. 

Nominating children under a binding nomination

If you nominate a child under the age of 18, your super balance may be paid into a trust account and a Trustee will be responsible for the money until they turn 18.  

Children aged between 18 and 25 who are considered to be your financial dependents can choose to receive your super balance as regular income payments if they’re your beneficiary. Any remaining account balance will be paid out to them in full when they turn 25. If your child is permanently disabled, they may continue to receive regular payments until the money runs out, regardless of their age.

Non-binding nomination

With a non-binding nomination, you tell your fund who you want your super balance paid to, however it’s not legally binding. 

This means that although your fund will take your wishes into account, it will ultimately make a decision based on relevant laws. They may also consider the needs of your dependents at the time of your death.  

In some situations this could be different to your non-binding nomination, although it will always be in accordance with the law. The account balance will normally be paid as a one-off payment. 

Reversionary nomination for retirement account holders

If you’re the holder of an account-based pension, (such as AustralianSuper’s Choice Income account or a Transition to Retirement account), you can make what’s known as a ‘reversionary nomination’. This means that in the event of your death, payments will continue to go to your nominated beneficiary. The balance of your account stays with the super fund to maintain the benefits of the account.

The reversionary beneficiary of your retirement account receives regular income payments until the balance reaches $0. However, you can’t nominate your estate or legal personal representative in this instance, as you can with other nomination types.

If your children are over the age of 18, they must be permanently disabled, or younger than 25 and financially dependent on you at the time of your death for a reversionary nomination to be valid.

It’s important to know that making or changing a reversionary nomination could impact your Centrelink benefits. For up to date information on these rules, please visit dss.gov.au. 

In order to understand if your Centrelink benefits will be impacted, it’s wise to seek financial advice before changing or making a reversionary nomination. 

Beneficiary payments and tax 

The rules about the tax applied to beneficiary payments can be complex. It depends on your relationship with the beneficiary and type of nomination made. 

For example: 

• If the beneficiary is considered a financial dependent, they may qualify as a dependent and receive the benefit tax free. 
• If the beneficiary is not considered a financial dependent (such as a financially independent adult child) they may need to pay tax on some of the benefit. 

Whether you receive super payments as a lump sum or as an income stream can also affect the tax you pay. 

Learn more about super death benefits on the ATO website.  

Check or update your beneficiaries 

It’s important to keep your nominations up to date, so it reflects your circumstances and wishes. 

You can review who gets your super at any time. However, a good time to check your beneficiaries is after a big life event, such as: 

• marriage
• divorce or separation
• having children
• the death of a loved one.

AustralianSuper Members

If you’re an AustralianSuper member, it’s simple to review or change your beneficiaries. 

1. Binding nominations: Log in to your account to review your binding nominations. To make, change or cancel these nominations, complete a Binding death nomination form on our Forms and fact sheets page. 
2. Non-binding nominations: Log in to your account and select ‘Beneficiaries for my super account.’ Here, you can review, make, change or cancel your non-binding nominations.  

REVIEW YOUR BENEFICIARIES

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