Protecting the people you care about most
ESSSuper - 11 Dec 2023
Super can be a person's biggest asset, and for many families, it can come as shock to learn that when somebody dies, their super is treated differently to other assets.
You may have seen recent news stories where families dealing with the loss of a loved one have experienced further distress when they've found that the way the person's super is distributed doesn't line up with what they or their family expected.
Many people don't know this, but your will alone may not determine how your super death benefits will be distributed.
How is super distributed after a person dies?
Australian super laws mean that the trustee of your super fund (in our case, the ESSSuper Board) is responsible for deciding who gets these benefits.
Especially when new or complex family arrangements are involved — including divorce, remarriage and defacto relationships — this could mean that your super is distributed in a way you didn't expect. Confusion around the distribution of super can contribute to conflict and stress for your loved ones at an already difficult time.
However, you can help to make sure your super benefits go to the right people, by making what is called a beneficiary nomination.
A nomination is a formal way of telling us who will be the nominated beneficiaries of your account.
What are beneficiary nominations and how do they work?
There's lots to understand about beneficiary nominations.
For starters, there are different types of beneficiary nominations that you can make, depending on the rules of your account:
- A binding nomination directs the Board regarding who receives your benefit, as well as the percentage they receive, and they are bound to the execution of your wishes relating to the distribution of your benefit as long as your nomination remains valid. Binding nominations are only valid for three years and if all relevant criteria are met.
- A non-binding nomination is a guide to the Board. They aren't obliged to carry out your directions, but will consider your nomination when making their decision regarding the distribution of your benefit.
You can also only nominate certain people — find out more on our Beneficiaries web page.
Do you have a pension?
If you have an ESSSuper pension, your options are likely to be defined by legislation. For example, your benefit may have to be paid to your spouse, or you may be able to make a non-binding death benefit nomination.
Please contact us for more information.
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Do you have a Retirement Income Stream?
Different options apply if you have an ESSSuper Retirement Income Stream: you can nominate an eligible dependant as a reversionary beneficiary, allowing the balance of your account to be paid to one of your eligible dependants after your death as an income stream rather than a lump sum.
For more information, refer to the Retirement Income Stream Product Disclosure Statement (PDS), available to read or download on our PDS and handbooks web page.
There can also be unexpected effects on people that can depend on the method you choose to distribute your super – things like Centrelink payments and tax impacts.
That's why it's essential to understand how nominating beneficiaries works, and what kind of nomination might best suit your situation.
How do you make sure your super assets go to the right people?
Although it can be tough to think about, ensuring your super supports the right people is important.
There can be unexpected legal and tax implications whenever you make significant choices about financial matters like this.
To find out more, you can book an appointment online or in person with one of our Member Education Consultants who, at no additional cost to you, can help explain how nominations work and other important things to consider.
If you'd like to seek more tailored advice that considers your personal financial circumstances, consider talking with an ESSSuper Financial Adviser,* and/or accessing independent legal advice.
Here are some additional resources: