Thinking about what happens to your super when you pass away isn’t easy, so much so that insights from the latest Super Consumers Pulse survey shows that 36% of Australians (about 6.5 million super members), haven’t yet made a death benefit nomination, despite this group having an average of $101,000 in super, plus insurance benefits.

However, taking a few simple steps now can give you peace of mind, knowing the people you care about most will be looked after.

When you nominate a beneficiary, you’re choosing who will receive your superannuation balance if you die. Your options are:

• Dependants – this can include your spouse (married or de facto), children (including step or adopted), anyone financially dependent on you, or anyone with whom you share an ‘interdependency relationship’. Although some exceptions may apply an interdependency relationship generally includes – you live together, and one or each provides each other with financial, domestic and personal support and care  
• Your estate – this means your super goes into your Will and is then distributed by your legal personal representative. It’s worth remembering that if your super is paid to your estate, it could be subject to challenges or claims from creditors.

If you do not have dependants or an estate, then your superannuation death benefit can pass to anyone in your life that the trustee deems appropriate. If the trustee cannot locate anyone appropriate, the benefit will pass to the Australian Taxation Office (ATO).

There are two ways to nominate your beneficiaries, and understanding the difference is important:

• Preferred nomination (non-binding): This is more like a guide. The trustee will consider your wishes but will also look at your personal situation when deciding who gets your super. For example, if your circumstances have changed (like separation, a new partner, or children), the outcome might not match what you originally intended.
• Binding nomination: This is more definitive. If your nomination is valid, the trustee must pay your super exactly as you instruct. Binding nominations can mean faster payments to your beneficiaries. But they need to be updated every three years, or they revert to preferred nominations.

For Retirement Accounts only (pension), there is the option of nominating a Reversionary Beneficiary. This must be a dependant, generally your spouse, and your pension would automatically continue to be paid to your reversionary beneficiary.

Life changes—relationships shift, families grow, and circumstances evolve. If you don’t update your nomination, the people you want to look after may not receive your benefit.

Imagine this: someone nominates their spouse years ago, later separates, and enters a new relationship with children. If they never update their nomination and a divorce had not been finalised, their separated spouse could still receive the full benefit under a binding nomination, leaving the new partner and children with nothing.