Estate planning options for your Pension account
26 March 2025
For Brighter Super members with a Pension account, estate planning isn’t always the most comfortable topic to think about, but it is a very necessary one.
The absence of a valid binding beneficiary or reversionary nomination can delay payment to loved ones during an already difficult time. This is because super funds are obligated to identify all potential beneficiaries before determining who will receive the benefit, in accordance with superannuation law and the governing rules of the fund. This process can take time.
Brighter Super’s goal is to reduce these delays by encouraging all members with Pension accounts to have an active nomination in place.
Members consistently tell us their top priority is for their loved ones to receive the benefit as quickly as possible. The information in this article can help you achieve this outcome.
Reversionary beneficiary nomination for Pension accounts
A reversionary beneficiary nomination allows you to nominate one person to continue to receive your Brighter Super Pension account benefit after your death.
They can choose to either take the money as a lump sum or continue to receive regular payments.
There are, however, limitations on who you can nominate. You can nominate your spouse, but you generally cannot nominate your adult child over the age of 18. The only exceptions are if your child is under the age of 25 and is financially dependent on you, or if your adult child meets specific disability requirements.
You can also nominate someone who isn’t a spouse or child if they have an interdependency relationship with you or are financially dependent on you.
You can nominate or cancel a reversionary beneficiary at any time using the Reversionary Beneficiary Nomination Form available at brightersuper.com.au/forms. We recommend talking to us before nominating someone, as the pension payment may affect their taxation situation and/or Centrelink entitlements. More details can be found below.
If you have more than one Brighter Super Pension account, you will need to make a separate nomination for each – although they can be for the same person. Any funds in a Brighter Super Accumulation account cannot be covered by a reversionary beneficiary nomination.
Binding beneficiary nomination
A binding beneficiary nomination allows you to choose one or more people to receive your super as a lump sum. This is a legal document that binds Brighter Super to pay your death benefit to whoever you have nominated, if they are eligible to receive your benefit at the time of your death.
The quickest and easiest way to make a binding beneficiary nomination is online.
- Log into your account in Member Online. If you haven’t used Member Online, you can register for access in a few minutes.
- On the left-hand navigation click on ‘Beneficiaries’ and you’ll be taken to a page explaining your next steps.
A binding beneficiary nomination that is made online is non-lapsing, which means it doesn’t expire until you make a change. However, it will become invalid if you have either nominated your spouse and permanently separate, or if you commence a relationship with a new spouse. Online nominations do not require witnesses.
An alternative way to make a Binding Death Benefit Nomination is to download and submit our printed PDF form, the Binding Death Benefit Nomination Form M10, available at brightersuper.com.au/forms under ‘superannuation’ and ‘retirement’.
On the printed PDF form, you can select if you would like your nomination to be non-lapsing or lapsing. If you select lapsing, it will be valid for three years. When a binding nomination expires, it reverts to a preferred nomination.
Unlike an online nomination, completing the printed form requires two witnesses to sign and date.
Another benefit of submitting your nomination online is that it is processed immediately, whereas a printed PDF form generally takes an average of three business days.
Who can I nominate as a beneficiary?
A binding beneficiary nomination tends to provide more flexibility than a reversionary nomination in who you can nominate to receive your benefit.
For a binding beneficiary nomination, a beneficiary can be anyone who meets the definition of a dependant for superannuation purposes:
- Your spouse – married or de facto.
- Any child – including stepchildren, adopted children, ex-nuptial children, or anyone who fits the definition of a child under the Family Law Act 1975.
- Any person with whom you have an interdependency relationship – defined as someone you have a close personal relationship with, you live with, and one or each of you provides the other with financial and domestic support and personal care.
- Any person who was financially dependent on you at the time of your death.
You can also choose to nominate your legal personal representative, such as the executor of your Will or the administrator of your estate. They can then distribute your super benefit according to your Will.
To nominate your legal personal representative, you will need to complete the Binding Death Benefit Nomination Form M10, available at brightersuper.com.au/forms under ‘superannuation’ and ‘retirement’. This type of nomination cannot be done through Member Online.
Over time, changes in your circumstances may affect the validity of your nomination. We recommend that you regularly review your beneficiary nominations.
What tax is payable on a death benefit?
Several factors play into how much (if any) tax your beneficiary pays on the super they receive as a death benefit, including the following:
- Both your and their age at the time of your death.
- Whether they are a dependant for tax purposes (this is the same as a dependant for superannuation purposes with the exception of children aged 18 or over, who are classed as non-dependants).
- The tax components (more information on that below).
- How the benefit is paid.
The table below shows what tax is payable for different scenarios.
| Type of benefit paid |
Your age at death |
Age of recipient |
Tax on taxable component |
Tax on tax-free component |
| Lump sum paid to a dependant for tax purposes |
Any age |
Any age |
No tax payable |
No tax payable |
| Lump sum paid to a non-dependant for tax purposes |
Any age |
Any age |
Taxed at a maximum rate of 17% (including 2% Medicare levy) |
No tax payable |
| Pension account income paid to a dependant (reversionary beneficiary) |
60 years and over |
Any age |
No tax payable |
No tax payable |
| Any age |
60 years and over |
No tax payable |
No tax payable |
| Under 60 years |
Under 60 years |
Taxed at marginal rate with a 15% tax offset |
No tax payable |
What are taxable and tax-free components?
When your super is in the accumulation phase, it is divided into taxable and tax-free components.
The tax-free component includes after-tax contributions, while the taxable component includes employer and salary sacrifice contributions, voluntary contributions you have claimed a tax deduction for, and investment earnings.
When you move your money from an Accumulation account to a Pension account, the ratio of tax-free and taxable component will carry across to the pension account, and any pension payments or withdrawals will be taken proportionately from the two components.
Strategies to reduce tax on death benefits
To minimise the impact of tax payable on a death benefit, some people choose to make withdrawals from their super during their lifetime to reduce the taxable component, or to leave assets that are more tax efficient to a beneficiary who is not a dependent (a non-dependent). You may also be able to use a withdrawal and recontribution strategy to increase your tax-free component percentage in your superannuation.
It’s worth discussing tax strategies with your financial adviser to help your beneficiaries maximise their inheritance. If you would like to discuss your options with one of Brighter Super’s financial advisers, contact us on 1800 444396.
We’re here to help
Further information is available in these documents:
We recommend you regularly review your beneficiaries and seek professional advice before making any arrangements regarding the treatment of your estate. There may also be social security or tax implications for your potential beneficiaries.
Brighter Super’s team of superannuation specialists and financial advisers are here to help you. If you have any questions about beneficiary nominations, please contact us on 1800 444 396.
Brighter Super Trustee (ABN 94 085 088 484 AFS Licence No. 230511) ("Trustee") as trustee for Brighter Super (ABN 23 053 121 564) ("Fund"). Brighter Super may refer to the Trustee or the Fund as the context may be. Brighter Super products are issued by the Trustee on behalf of the Fund. The information contained is up to date at the time of publishing. Some of the information may change following its release. Any questions can be referred to Brighter Super by calling 1800 444 396, or by emailing info@brightersuper.com.au.
This article may contain general advice, which has been prepared without taking into account your individual objectives, financial situation or needs. As such, you should consider the appropriateness of the advice to your objectives, financial situation and needs before acting on the advice. You should also obtain and consider the Product Disclosure Statement (PDS) and Financial Services Guide (FSG) before making any decision to acquire any product or contribute additional amounts to your Brighter Super account. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the PDSs, FSG and TMDs at www.brightersuper.com.au/pds-and-guides.
