Nominate your beneficiaries

The beneficiary nomination process

There are specific rules that apply to your super (including any insured benefits applicable to you) when you die.

Unlike other valuable assets you might have, like your home, a car or even shares, super has very specific purposes including – to fund your retirement, or to provide for people who you were financially providing for at the time of your death, like your partner and kids. Because it’s a different type of asset with a different purpose, it’s dealt with differently if you die. Instead of going into your estate, like your house or car, and being distributed according to your Will after any debts are paid (or according to a formula set by the state if you don’t have a Will), your super is usually paid as a lump sum to your beneficiaries. There are some exceptions which are summarised below.

What's a beneficiary?

Beneficiaries are certain people who can benefit from your super after your death. These are set out in superannuation law. These include your dependants, such as:

• Your spouse – your husband, wife or partner, including de-facto partner

• Your child (regardless of whether or not you’re married to their other parent, and including adopted and step-children)

• A person with whom you have in an interdependent relationship at the time of your death. ‘interdependent relationship’ usually means a close personal relationship between two people who live together, where one or both provides financial, domestic, and personal support of the other. There may be other circumstances where an interdependent relationship exists.

• Under superannuation law, your super can also be paid to your legal personal representative (eg. executor of your Will or administrator of your estate).

Typically, your parents, siblings, nieces, nephews, friends, neighbours, or housemates do not qualify as eligible beneficiaries, unless you had an interdependent relationship before your death.

With the purpose of super in mind, your spouse and/or children are usually given preference when the Vision Super Trustee must decide who to pay your benefit to.

The Vision Super Trustee must decide how to pay your benefit unless you have made a valid and effective binding beneficiary nomination telling the Trustee what to do. The types of beneficiary nominations you can make are described below. If you have a defined benefit account in Vision Super, under Vision Super's trust deed, your defined benefit can only be paid to your estate. If you have a pension account in Vision Super, you can set it up to pay your partner an ongoing pension like you were getting.

If your kids are under 18, a minor trust fund will be set up for them, with their legal guardian as the trustee to manage their money until they turn 18.

What if I don't have any dependants when I die?

If you don’t have anyone who’s financially dependent on you, and you are not in an interdependent relationship, a non-financial dependant or the person managing your estate would most likely be chosen as the beneficiary.

How can I be sure you’ll do what I want with my super?

If you want your super is distributed a particular way, you can do this by nominating one or more beneficiaries for your super. There a different types of nominations available to you as outlined below. If you make a valid and effective binding nomination, we generally have to pay your super in the way you've specified.

Binding nomination 

A binding nomination is a formal document about how you want us to pay your death benefit. You can only make a binding nomination to your spouse, child, interdependant or your estate – or any combination of these.

An example of why you might want to make a binding nomination would be if you wanted your super to go to your adult kids, not your spouse. Your spouse is automatically assumed to be your financial dependent, and without a binding nomination the Trustee may pay them your whole death benefit if you or your spouse have no children under 18. However, you can make a binding nomination to ensure your adult children who aren’t financially dependent on you get some or even all of your death benefit. Vision Super would not be able to consider the financial needs of your spouse and must pay the benefit to your adult children in accordance with your nomination.

Like all formal documents, a binding nomination must be properly completed for it to be valid. To be valid, a binding nomination must:

• Be completed on our binding nomination form

• Nominate one or more of your dependants and/or a legal representative

• If you nominate more than none beneficiary, you show a total distribution value that adds up to 100%

• Be witnessed by two adults who are not nominated as a beneficiary.

Binding nominations expire three years from the date they are signed. You can renew them, or make a new one at any time by completing a new nomination form. We will let you know when your binding nomination is due to expire. If you don’t renew it, it will be treated as a preferred nomination.

Preferred nomination

A preferred beneficiary nomination, also called a ‘non-binding nomination’ is an informal way of letting us know who you’d like your death benefit to be paid to, and it doesn’t expire.

If you die, Vision Super will take into consideration your wishes, your family structure, your personal relationships, your Will, and any other details needed to understand your personal circumstances. We'll use this information to determine your eligible dependants or beneficiaries and the nature and extent of any dependencies.

Reversionary nominations (for pension accounts in Vision Super)

When you set up your pension, you can nominate your death benefit to be paid to your spouse or child as a pension payment. They’ll get regular payments just like you did, until there’s no money left in the account. You can only make a reversionary nominations at the time you set up your pension account, and you can’t change it afterwards. You should also be aware that this type of nomination may have Centrelink or superannuation balance cap implications for the person getting the pension.

We recommend you seek financial advice if you aren’t sure about how this type of nomination my affect your spouse’s or children’s circumstances.

Defined benefit accounts in Vision Super

You can’t nominate a beneficiary for a defined benefit. Under Vision Super's trust deed it can only be paid to your legal personal representative and go into your estate.

What happens if I don’t have a nomination?

Without a nomination, the Trustee is responsible in deciding your beneficiaries and how much of your benefit they each get.

Will my super be taxed?

Whether super death benefits are subject to tax depend on a number of factors including whether the recipient is a dependant for tax purposes (tax dependant). Under tax law, a tax dependant is defined differently to a dependant under superannuation law and includes a deceased's existing or former spouse (including defacto), a child of the deceased under 18, and a person financially dependent on, or in an interdependency relationship with, the deceased.If your super is going to be financial dependent like your partner or kids, or an interdependent, there won’t be any tax withheld when we pay the benefit. If your super is going to a non-financial dependent, tax must be withheld. If it’s paid to your estate so it can be distributed according to your Will, we won’t take tax out, but the estate may have to pay tax. This will be calculated by the executor or administrator of your estate and paid out of the estate.

The tax rates for taxed funds like Vision Super vary depending on whether a death benefit is paid as a lump sum or an ongoing (reversionay) pension, and are shown below. The table assumes your fund holds your tax file number. The taxation rules are complex and special rules may apply to defined benefit pensions. We recommend that you seek tax advice.

* A child must be under 18, or a financial dependant or interdependant of age, to be a tax dependant.

Case study

This is an illustration only. How death benefits are distributed depends on a fund's trust deed, the deceased member's circumstances and the exercise of the Trustee's discretion (where there is no valid and effective binding beneficiary nomination). Peter is married to Jenny. Their two kids, Max (age 21) and Noah (age 16) and Jenny’s brother Sam all live with them. Peter also had a daughter, Mary (age 25) with his ex-wife. Mary lives with her mother. The table below shows how a beneficiary nomination might apply after Peter’s death.