Published 14 June 2021
You are growing your superannuation to fund your dream retirement. But what happens to your super in the event of your death?
You can arrange for your family to receive your super after you have gone. These are your beneficiaries, and you can nominate them with your super fund.
We’ve listed 10 things that you should know about nominating beneficiaries, which could help your family in the future.
Your super can be one of your biggest assets. But did you know it does not automatically form part of your estate, even if your wishes are included in your Will?
Super is different from other assets such as a house, savings or investments because it is held in trust by your super fund until you or your beneficiaries are eligible to access it.
To arrange who receives your super in the event of your death, you will need to nominate your beneficiaries with LGIAsuper.
Your beneficiaries will receive the amount of money in your super account plus any insurance benefit that is payable. This is called a superannuation death benefit.
A binding death benefit nomination is a legal document that binds LGIAsuper to pay your death benefit to whoever you have nominated – if they are eligible to receive your benefit at the time of your death (more on that below).
Making a valid binding nomination puts you in control, and it can make it quicker and easier for your loved ones to receive their money after you’ve gone.
A binding nomination can be particularly useful if you have a complex family situation, such as an ex-partner or children of a current and former relationship.
Another type of nomination is called a reversionary beneficiary nomination. This is when your pension can continue to be paid as a pension to your beneficiary (generally your spouse).
Before nominating a reversionary beneficiary, it’s a good idea to contact us so we can explain all factors involved with this type of nomination. Your pension payment may affect a reversionary beneficiary’s financial position, including their tax situation and/or Centrelink benefits.
LGIAsuper can only pay a death benefit to a valid beneficiary (as required by law), which can be one or more of the following:
a. Your dependants, which are defined as:
b. Your legal personal representative – for example, an executor of your Will or administrator of your estate.
Full details about the eligibility of dependents and interdependent relationships are available in our Nominating your beneficiary guide.
In the event of your death, LGIAsuper will generally pay your benefit to your dependant/s or legal personal representative.
If you die without nominating a beneficiary, LGIAsuper would pay your death benefit in line with the rules set out in our Trust Deed and superannuation legislation.
This means we are required by law to determine how to distribute your money. If you have a complex family situation – the outcome could be different to what you had in mind.
Binding nominations are valid for three years. Your annual statement or Member Online account will show whether you currently have a valid nomination in place.
We will also send you reminders when your nominations are about to expire. You can renew your nomination over the phone or change or cancel your nomination.
Your circumstances may change, and you may need to update your beneficiaries. For example, you may have a new son or daughter, or one of your beneficiaries is no longer a dependant.
You can change or cancel your nomination at any time.
To change or cancel your previous nomination, complete a new Binding death benefit nomination form.
Death benefits paid as a lump sum are tax-free if paid to an eligible dependant as defined by the Australian Taxation Office.
If a death benefit is paid to someone not considered a dependant, including an adult child who is not financially dependent on you, the benefit’s taxable portion is taxed at 17%. The untaxed component is taxed at 32%. The taxed and untaxed components are calculated at the time of payment.
Death benefits taken as a reversionary pension are taxed differently.
Further information on taxation is in our Nominating your beneficiary guide.
To make a binding death benefit nomination, you will need to complete and return the Binding death benefit nomination form.
LGIAsuper will confirm in writing if your nomination has been accepted and the date it expires. If your nomination is invalid, we will let you know why and how you can make it valid.
Before you make a nomination, we recommend you read our Nominating your beneficiary guide.
We also recommend you 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.
LGIAsuper is here to help you. Contact us on 1800 444 396 to talk through your options and have your questions answered.