What happens to your super when you die?

So… what does happen to your super when you die?

The answer to this question depends on what you organise with your super fund. In this article, we’ll walk you through some of the key things to know.

Your super doesn’t automatically form part of your estate, even if you’ve mentioned this in your will. If you don't formally let your super fund know where to pay your death benefit through a binding nomination, they’ll need to make the decision for you, which can cause delays or potentially not align with your wishes.

What is a death benefit?

A death benefit is the money paid from your super fund after you’ve passed away. It generally includes your super balance, any payable insurance benefits, and earnings up to the payment date (minus any fees, insurance premiums and taxes). Super death benefits are generally paid as a lump sum to your nominated beneficiaries.

Beneficiary nominations – and why they’re important

Making a beneficiary nomination means you’re telling your super fund who you’d like your money to go to. It provides us with clear instructions to guide us in paying your benefits as you wish.

There are different nomination options for your super and strict restrictions on who you can nominate, so it’s important to understand how it works, which we’ll break down below.

Who can be nominated?

There are restrictions on who you can nominate. Eligible nominees are one or more of the following:

• your spouse
• your children
• someone who’s financially dependent on you
• someone you’re in an interdependent relationship with
• your legal personal representative (meaning your death benefit will form part of your estate and be distributed according to your Will).

Learn more about who you can nominate as a beneficiary.

Types of super beneficiary nominations

At UniSuper, we offer two beneficiary nomination options: non-binding and binding.

Non-binding nomination

This nomination lets us know where you’d prefer your benefits to be paid, but it isn’t legally binding to us. We’ll consider the nomination, but other factors will also be taken into account before making the final decision.

Binding nomination

A binding nomination is just that—binding. We’re legally required to pay your benefits as you instructed, as long as the nomination is valid when you pass away.

There are two types of binding nominations:

Some things to keep in mind

We know it’s not the easiest topic to think about, but planning ahead means your super is more likely to be paid as you wish. Here are a few things to stay on top of:

• Keep your nominations up to date – The people you want to receive your super can change over time, so it’s important to check your nominations regularly, especially if your personal circumstances change. Remember that even if a binding nomination is valid when you first complete it, changes in your circumstances could mean that your existing nominee is no longer valid.
• Review your insurance cover – Any payable Death cover you hold through your super is generally included in your death benefit. Review your cover regularly to know what cover you have and whether the amount still suits your needs.
• If you have a pension account – Death benefits can be paid as a lump sum or income stream, depending on your pension account type and nominations in place. If this applies to you, make sure you understand the pension beneficiary options.

Making a beneficiary nomination is an important decision, which is why we offer helpful resources to help you learn more about nominating a beneficiary. You'll find FAQs that cover key topics like what happens if you don’t nominate and how death benefits are taxed.

Need extra support? Our super consultants can provide you with general advice on the basics of nominating a beneficiary. Book your 30-minute appointment today.