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Make sure you choose who gets your super

Superannuation is almost as important after your death as it is for your retirement years, writes Anna Kennedy.

Few of us like to think about what happens when we die, but considering how it may financially impact family and loved ones, it is important we think it through.

When you think of what you should do with your assets – is super on your list? Many of us don’t know that when we pass away our superannuation balance and associated insurance benefits (called superannuation benefits or death benefits), may be allocated to a family member or dependant, and can be split amongst several people.

We know having a will is vital so assets such as property and shares are allocated as you desire. Super should also be on this list for consideration. Nominating beneficiaries can help provide for your family after you’re gone. Your super balance (and associated insurance benefits) may be issued to your beneficiaries as a lump sum, an income stream or a combination of the two.

According to former Association of Superannuation Funds of Australia (ASFA) CEO Ms Pauline Vamos: “Many people do not realise that their superannuation is treated differently to their other assets when they die. However, often it will be one of the biggest assets they are able to pass on. Being specific about their wishes and providing the right information to their fund is therefore crucially important.”

Considering superannuation can become your most valuable asset over your lifetime worth five, six or seven figures, it’s essential you ensure it goes to the right people.

What is a beneficiary?

A person nominated to receive your superannuation benefits (also called death benefits) is called a beneficiary. By nominating a beneficiary, you can reduce the stress and pressure experienced by loved ones at an already difficult time, as once you’ve made your nominations the Trustee of your fund already knows who to allocate the benefit to. 

Remove this worry, and think about who you want to receive these benefits. It’s one less thing to think about when planning what will happen with your estate and can give you peace of mind.

Generally you must nominate a dependant, such as your current spouse – including de facto relationships (opposite or same-sex couples). Your children can be nominated, whether biological, step-kids or adopted. Another category is a person who is financially dependent on you at the time of your death.

It’s also possible to nominate your estate to receive these benefits, so your super balance (including the associated insurance benefits) become assets in your will.

If you choose not to nominate a beneficiary, the trustee will decide on your behalf who receives your superannuation benefits.

How do I nominate someone?

It’s easy to nominate your beneficiary or change your nomination. You can contact your super fund to let them know. ANZ Smart Choice Super members can use ANZ Internet Banking or call customer services. 

Once your account is open, you can nominate who receives you super savings and insurance benefits by making a binding non-lapsing nomination. You can also nominate as many beneficiaries as you like.

What is a binding non-lapsing nomination?

This is a nomination of your beneficiary or beneficiaries that, pending it meets all legal requirements, will not expire over time and we are required to pay your money to the people you have nominated in the proportions you have requested. 

This is subject to the nominated people being a dependant at the time of your death, and the nomination is current.  For example, you will need to renew this nomination should you become married, enter into a de facto relationship or become separated.

Each superannuation fund is different, so it’s key you understand the rules before you take action. It’s also important to look at estate planning as a whole, with your super fund as part of it, so consider speaking to a financial adviser to make sure all your assets are covered. 

September 2016