Millions of Australians will have no say in who inherits their super
New research shows most Australians have not made a legally binding death benefit nomination to ensure their superannuation goes to who they want it to when they die. And many funds do not make it easy.
Millions of Australians lack the ability to determine who inherits their superannuation funds, according to a recent study by Super Consumers Australia. The research indicates that approximately 15.7 million individuals do not possess a legally binding death benefit nomination, which would allow them to specify their wishes regarding the distribution of their super funds upon death.
Unlike a will, superannuation is held in trust by a superannuation fund, giving the trustee the authority to decide who receives the funds. However, not all super funds provide the option for binding nominations, leaving many Australians unaware of the potential consequences.
In a case reported by ABC News, an individual named Ms. Allan learned that her uncle's superannuation would not be divided equally between her and her cousin, as they had listed on his death benefit nomination form. Instead, his estranged son was awarded the entire $130,000 payout. Ms. Allan expressed her anger, stating that superannuation should not automatically follow the will, as it is managed by a trustee who can exercise discretion in distributing the funds. She questioned the purpose of nominating anyone if super funds do not adhere to these wishes.
The study found that only 10% of the 5,000 people surveyed had been contacted by their super fund about making a legally binding death benefit nomination in the past year, while 87% claimed they did not have one. Super Consumers CEO Xavier O Halloran highlighted the poor communication from super funds, emphasizing that these nominations are crucial for ensuring loved ones receive the intended benefits.
The delay in processing claims, particularly when there are no binding nominations, can result in significant delays and financial hardship for grieving families. ASIC, the regulator overseeing super funds, has been addressing these issues by scrutinizing the time taken to pay out death benefit claims and taking enforcement actions against trustees who fail to meet their obligations.
Written by urgent.news from ABC News AU's reporting — not their text. Machine-written — it may contain errors, so check the original before relying on it.
