Does your superannuation fund allow you to provide a binding nomination?  Do you know what a binding nomination is?   Don’t get confused with the nominated beneficiary box you ticked when filling out the superannuation paperwork that came with the new job you just started.  

Few people understand the difference between binding nominations and nominated beneficiaries and few superannuation funds clearly explain the different nominations to their members.  Some don’t even offer the provision to nominate anyone.  Unless you’re lucky enough to stumble across the paragraph on nominations in the super fund’s member booklet full of fine print that’s too wordy or too legalistic for the average person to understand; or worse, the prints so small that you will need your strongest nana glasses to read it, many people aren’t even aware that such nominations exist.

You may have thought you had all bases covered when you initially filled out your super paperwork and nominated who you wanted to receive your super in the event that you died.  While your intentions may have been that it was your spouse or children who would financially benefit from your super and any insurance payouts in the event of your death, unless you have a binding nomination it is the trustee of your super fund who ultimately decides on who receives your benefits. 

Generally a fund’s trust deed states that a benefit is paid to a dependant or anyone who is financially dependent in any way on the member.  While the deed may in fact reflect your intentions, the super trustees must also go through a claim staking process, which involves notifying anyone who may be entitled to claim on your super.  This may encourage people to make a claim, purely because it has come to their intention that they may be entitled to a benefit. 

As a result the distribution of a member’s super death benefit can become a time consuming and sometimes costly process.   Beneficiaries can appeal the trustee’s decision through the Superannuation Claims Tribunal and due to the processes involved, the distribution of the superannuation proceeds can take many months and even years.

In the meantime, your loved ones are left to deal with the financial, emotional and physical devastation of no longer having you in their life.  To add to their difficulties, they are left to deal with the stress of the superannuation claim appeals process, not to mention the disintegrating family relationships that may result from such a process.

Completing a binding nominate will stop this situation from arising.  A binding nomination binds the trustee of your super fund to follow your wishes and distribute your benefits to those you have nominated. 

You will need to keep your nominations up to date, especially if you marry, re-marry or have children. You will also be asked to update or confirm these nominations every three years, which provides a timely reminder to review your estate and ensure your estate planning is to date.

For more information on binding nominations, contact your super fund and ask for a binding nomination form.  If they can’t help you, talk to your financial planner or give us a call on 1300 766 323.

Please Note:

This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you need to consider (with or without the assistance of an adviser) whether this information is appropriate to your needs, objectives and circumstances. This information is provided for persons in Australia only and is not provided for the use of any person who is in any other country.

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