Choosing your super beneficiaries

Understanding Your Super Beneficiary Choices

Nominating a super beneficiary is an important part of managing your super and planning ahead. It helps ensure your super is paid in line with your wishes if you pass away.

Many members are surprised to learn that super is not automatically covered by their will. This is because your super is held in a trust and managed by a trustee on your behalf, rather than being owned by you personally. As a result, it does not automatically form part of your estate. Your super is generally paid according to your beneficiary nomination or, if you do not have one in place, under superannuation law and at the discretion of the fund trustee.

This means everyone’s circumstances are different. Relationships, family structures and financial responsibilities can change over time. This guide is designed to help you understand your super beneficiary options in a clear and supportive way, so you can feel informed and confident about your choices.

The information below is general in nature and intended to help you understand how beneficiary nominations work.

Why Reviewing Your Beneficiary Choices Matters

Your super may be one of the largest assets you leave behind. When you pass away, it is usually paid as a super death benefit to your nominated beneficiaries or eligible dependants.

Life rarely stays the same. Changes such as getting married, separating, having children, entering a new relationship, or experiencing changes in financial circumstances can all affect who you may want to receive your super.

If your beneficiary nomination does not reflect your current situation, your super may be paid in a way you did not intend. For example, a nomination made many years ago may no longer align with your relationships or responsibilities today.

Reviewing your beneficiary choices regularly can help ensure your nomination continues to reflect your wishes. Many members find it helpful to make reviewing their beneficiary details an annual habit, such as when checking their super statement or updating other personal details. You may also wish to review your nomination after any major life event, even if your circumstances feel relatively stable.

You can learn more about the process on Prime Super’s page about nominating beneficiaries.

Who Can You Nominate as a Beneficiary

You are able to nominate anyone who is considered to be a Dependant under superannuation law. You can also nominate your estate as your beneficiary, so that your benefit can be paid in line with your will.

Generally, a Dependant may include:

• Your spouse This can include a married spouse or a de facto partner, including a same-sex partner.
• Your children (including adult children) This includes biological children, adopted children, stepchildren and, in some cases, children of your spouse.
• A person who is financially dependent on you
  This may be someone who relies on you for ongoing financial support, such as help with living expenses.
• A person in an interdependent relationship with you
  An interdependent relationship usually involves two people who live together, have a close personal relationship and provide financial and domestic support to each other. This can apply even if you are not related.
  
  For example:

• A partner you live with and share finances with may be considered a Dependant.

• If you have a close friend or relative you live with and support, or who supports you, this may be considered an interdependent relationship.

It’s also important to note that not everyone you may wish to nominate will automatically meet the legal definition of a dependant for super. For example, friends, parents, siblings or grandchildren would not be considered Dependants unless they were financially dependent on you or in an interdependent relationship with you. Understanding these definitions can help you make informed choices when nominating your beneficiaries and ensure your nomination is valid.

Binding and Non-Binding Nominations Explained

When nominating a beneficiary, you will usually choose between a binding death benefit nomination and a non-binding nomination. Each option works differently and offers a different level of certainty.

Binding death benefit nomination

A binding death benefit nomination allows you to direct exactly who your super death benefit is paid to, as long as your nomination is valid and your nominated beneficiaries are Dependants under super law. A binding death benefit nomination gives you greater peace of mind that your super will be paid in accordance to your wishes - just make sure that your nomination is a ‘Dependant’ under superannuation law.

Key features may include:

• Your nomination must meet specific legal requirements to be valid.

• You can have a lapsing binding beneficiary which must be renewed every three years, or a non-lapsing binding beneficiary which doesn't need to be renewed but can be changed if you choose to do so.

• If valid, the trustee must pay your super according to your nomination.

Binding nominations will normally provide members with greater certainty about where their super will go.

Non-binding nomination

A non-binding nomination lets you express your preferences, but it is not legally binding on the trustee. The Trustee has to also consider anyone who is a financial dependant over your preferences, in line with the regulators expectations, so your non-binding preference may not be followed.

Key features may include:

• Your nomination acts as a guide to the trustee, rather than a binding instruction.

• The trustee must use its discretion when deciding who will receive your benefit and will consider your nomination alongside your personal circumstances at the time you passed away.

• The trustee is expected to favour nominees who were financially dependent on you over those who weren’t (such as adult children, who no longer relied on you financially)

• It may be more flexible if your situation changes and your nomination has not been updated.

Some members choose this option if they are comfortable with the trustee considering their circumstances when the benefit is paid.

You can find the relevant forms and more information on Prime Super’s forms page.

How to Nominate or Update Your Super Beneficiary

Keeping your super beneficiary details up to date does not need to be complicated. Taking the time to review and update your nomination can help provide peace of mind.

A general process may include:

1. Review your current nomination
   Check who you have nominated and whether the nomination is still valid and appropriate for your circumstances.
2. Decide who you would like to nominate
   Consider who you would want to receive your super and whether they meet the definition of a dependant for super.
3. Choose your nomination type
   Decide whether a binding death benefit nomination or a non-binding nomination best suits your needs.
   
4. Complete the required form
   Ensure all details are accurate and the form is completed according to the instructions provided.
5. Submit and keep a copy for your records
   Retaining a copy can make future reviews easier.

You can access your account and update your details through Prime Super’s member access area.

If you need help understanding the process or have questions about forms, Prime Super’s support team is available. You can get in touch via the contact us page.

Choosing a super beneficiary is a personal decision that reflects your relationships, responsibilities and priorities at a point in time.

By understanding who you can nominate, the difference between binding and non-binding nominations, and the importance of regular reviews, you can feel more confident about how your super may be paid in the future.

Take a moment to review your beneficiary nomination so you can feel confident your super aligns with your wishes as your life evolves.