Superannuation can be amongst the largest financial assets we have and yet it is so often overlooked when it comes to life planning. When thinking about your assets, especially those that we would like to pass on to our family and loved ones, setting up your superannuation funds incorrectly could have dire consequences. Let’s take a look at the different types of nominations available to you so that you can plan appropriately.
If you didn't already know, you have the opportunity to nominate who your Superannuation will go to after you pass away so that your hard earned money can take care of those who are most important to you. Often, we can forget about nominating a beneficiary for our Superannuation money, however the consequences of not having done so can be dire for your loved ones, and perhaps for your personal wishes.
Please note: Your Superannuation fund has different types of nominations available and their own unique procedures in handling this.
However, generally speaking, the types of Superannuation nominations may be categorised as follows:
1. Binding Nomination. This is a written notice provided to the Trustee of your Super Fund. A binding nomination means that you have explicitly nominated a beneficiary to receive your Superannuation funds when you pass away. These generally remain valid for only 3 years.
2. Non-Binding Nomination. This is the type of nomination where you indicate who you would like to receive your Superannuation money, however it is not legally binding. You will need to make sure to update this every three years or as your Super Fund requires.
3. Non-Lapsing Binding Nomination. This is a type of nomination is similar to a Binding Nomination with the only difference being that it applies indefinitely and does not require you updating it every 3 years or so.
4. Reversionary Nomination. This type of nomination allows you to give the beneficiary specified regular income payments from your account until the balance is $0.
If you have not nominated a beneficiary to your Superannuation funds and you pass away, it is up to the discretion of your Super Fund to allocate the funds. They must follow the guidelines set out in the Superannuation Industry (Supervision) Act 1993 as to who is entitled to receive your super money.
After having nominated a beneficiary for your Superannuation Account with your provider, it is important to share this information with your nominated beneficiaries and Executor so that they are aware.
LifeReady has created a Record specifically for Superannuation that allows you to easily and securely store this information in your Digital Vault, whilst also enabling you to add your beneficiaries as Trusted Parties who can access this information when needed.