With the holiday season upon us, for many, the holidays are spent with family and loved ones and are a chance to reflect and take stock of changes which have occurred since the last festive season.
Perhaps your financial situation has changed, or you have had a health scare over the past year. You may have welcomed a new member to the family - either by birth or marriage. Whatever the case, it is important to ensure that you and your loved ones are looked after, regardless of what the upcoming year may hold.
A lot of people don’t realise that your super comes with a key benefit, outside of your retirement, which for many people, is death insurance.
A morbid topic, but what does happen to your family, and those dependent on you, if you pass away unexpectedly?
While you may not have a large amount in your super right now, it will grow over time, and if you couple this with death insurance, it is worthwhile to have nominated who should get your super and death benefit in the event of your death.
Here are four things most people do not know about their super and what happens to it if you pass away:
1. The law has a say in who gets your super!
Your superannuation must be passed to either a ‘superannuation dependent’ or legal personal representative. By superannuation dependent, we mean anyone that is financially dependent on you, for example your spouse, child or someone in an interdependency relationship.
2. Your will won’t cover your super
Many people don’t realise that superannuation is not an estate asset and is governed by different laws than those that cover your other assets such as property, investments and savings.
This means that your will does not automatically cover your superannuation. Making sure your will and super beneficiaries are aligned and up-to-date is important if you have specific wishes you want to happen on your death, or you want to prevent any kind of confusion or disagreements on your death.
3. More than one third of disputes over super are related to death beneficiaries
For some of us, we have complex, blended families, and this is one of the factors that gives rise to more than one third of superannuation complaints with the Australian Financial Complaints Authority. You can remove the likelihood of this happening by putting in place a binding death nomination, which can remove confusion and save your loved ones from uncertainty at a time of stress and loss.
4. It’s not just about your super balance
Some people don’t consider their balance significant enough to worry about. But with regular contributions and time, your super can grow into one of your most valuable assets.
Moreover, you may also have death insurance as part of your super benefits, which can be a large amount*. Making sure you are proactive and future-thinking is important so that you can take care of your loved ones when you’re no longer around.
There are 2 types of beneficiaries available:
Non-binding (preferred) Nominations
If you make a non-binding (preferred) nomination, the trustee of REI Super will consider your nomination when deciding who will receive your death benefit. However, it is important to note that a non-binding nomination means the trustee of your superannuation fund is not bound by this nomination request.
If you make a valid binding nomination in accordance with the legislative requirements, the trustee of REI Super must pay your super to the beneficiaries you have nominated in the proportions specified. A binding nomination is a legally binding document and as such, must be on the appropriate form, and unlike the non-binding nomination, the trustee of your superannuation fund is bound to fulfill the requests of your binding nomination.
How to update your beneficiaries
With REI Super you can update your preferred beneficiaries online. Simply login and navigate to beneficiaries and update the details.
A binding nomination has to be updated at least every 3 years; we will let you know when it is about to expire.
Have questions? Phone 1300 13 44 33.
REI Super are always here to help.
*As premiums are paid from your superannuation savings, your superannuation balance will reduce by the premium paid each year.
Important things to note: It is recommended you seek Tax, financial, and/ or Legal Advice prior to implementing your Binding death beneficiary nominations (BDBN), as there maybe potential adverse tax implications for certain beneficiaries. When a BDBN is in force, the Trustee will have no discretion on beneficiary payments or to act on their behalf in the event of a claim.
Disclaimer: The information contained on this webpage does not constitute financial product advice. However, to the extent that the information may be considered to be general financial product advice, REI Super advises that REI Super has not considered any individual person’s objectives, financial situation or particular needs. Individuals need to consider whether the advice is appropriate in light of their goals, objectives and current situation. Member should obtain and read the Product Disclosure Statement for REI Super before making any decisions. REI Superannuation Fund Pty Ltd ABN 68 056 044 770 AFSL 240569. RSE L 0000314 REI Super ABN 76 641 658 449 RSE R1000412 MySuper unique identifier 76641658449129 November 2020.