Millions of Australians may believe their superannuation will automatically go to the people they name in their will when they die. But this is not necessarily so. A recent news report by ABC Information & Services News suggests that around 15.7 million Australians may not have a legally binding death-benefit nomination, which would give super funds a fair amount of discretion over who gets the money. The issue is drawing attention as regulators and consumer advocates call for clearer rules and faster processing of death-benefit claims.
Why your super isn’t controlled by your will
If we go by the report, superannuation is not automatically included in a person’s estate as a general rule. Instead the money is put in a trust and managed by the super fund’s trustee. The trustee determines who is entitled to receive the accumulated superannuation and any insurance benefits payable on the death of a member. This means a member’s will may not be enough to ensure their super goes to their preferred beneficiaries. Binding death benefit nominations can add certainty, by legally binding the trustee to pay the benefit to eligible beneficiaries or the member’s estate.
15.7 million Australians could be nomination-free
According to a Super Consumers Australia research, experts have found many Australians either don’t have a binding nomination or may have been inadequately informed about making one. In a 2025 survey of 5,000 people by the organization, 67 per cent said they had not been contacted by their super fund in the past year to make a binding death-benefit nomination. Only 10 per cent said they had been contacted and 13 per cent said they already had a binding nomination. Based on these findings and Australian Taxation Office data showing approximately 18 million people have a superannuation account, Super Consumers estimated that about 15.7 million people may not have a binding nomination.It is also mentioned that super funds need to do more to explain the significance of these nominations and to make the process easier for members, the organization said.A family dispute brings the issue to light. ABC eported the story of Brooke Allan, whose uncle had added her and her cousin to a death benefit nomination form with Cbus. After his death in 2024, the two nieces tried to claim the superannuation, thinking the nomination showed his wishes. Later, however, the fund discovered that the nomination was not legally binding. Cbus eventually paid out about $130,000 to the man’s estranged son, identified by the trustee as his sole dependant under superannuation rules.The case shows the distinction between a member expressing a preference and a binding legal nomination. If a person has made their wishes known, even in the form of a non-binding nomination, the trustee has the final say.
Not all nominations are created equal
Death benefit nominations come in different forms and not all super funds offer the same options. The news report states tha a binding death-benefit nomination is a legally enforceable direction to the trustee to pay the benefit to eligible beneficiaries or the member’s estate, if the nomination satisfies the relevant requirements. And, the non-binding nomination only reflects the member’s preference. The trustee can choose who gets the money. Also, a reversionary nomination (for some pension accounts) means your pension will continue to an eligible dependant when you die. Depending on the fund and the type of nomination, binding nominations may also need to be renewed from time to time. Some funds allow you to make non-lapsing binding nominations.
Who can get Superannuation?
Death benefits are generally subject to superannuation law restrictions, states the report. Eligible beneficiaries can include a spouse or partner, children and people who were financially dependent on the deceased. A member may also nominate their legal personal representative. Where this is the case, the benefit will be paid to the member’s estate and distributed according to the member’s estate arrangements. This means members need to understand the rules of their super fund and the legal obligations for beneficiaries.
Regulators tell funds to improve process
The report states that ASIC has been looking into how super funds deal with death benefit claims. Its reviews have found that the processing time for claims involving no nomination and a non-binding nomination can be longer. ASIC has also expressed concern at the frequency with which funds require members to update their nominations. Some trustees had contacted members once before a nomination had expired, while others had contacted members near expiry. The regulator has urged super funds to be more proactive in helping members understand and retain their nominations, states ABC report.
Government to think about compulsory time frames
The federal government is also considering introducing mandatory timeframes for super funds to respond to insurance claims, including death-benefit claims. Consumer advocates say the end-to-end deadlines need to be tightened up, arguing families shouldn’t have to wait forever for claims to be assessed. But industry representatives have said complicated cases involving competing claims may require more time for trustees to carefully assess the circumstances.Images Courtesy: istock
