The Superannuation Legislation Amendment Act 1999 allowed superannuation funds to offer members the opportunity to make binding death benefit nominations. If a member completes a binding death benefit nomination in the correct form, the trustee must distribute the death benefits to the nominated beneficiary or beneficiaries in the proportions specified and has no discretion to vary or override the allocation.
Witnessing, renewal and reporting requirements must be met for the nomination to be valid.
Funds are not obliged to offer binding nominations. To date, very few have done so.
Who may be nominated beneficiaries?
A nominated beneficiary must be the member’s legal personal representative or dependant at least at the time of death. There is some doubt as to whether this extends to the date of nomination.
Preferred nominations(i.e. non-binding nominations)
Most superannuation funds offer their members the opportunity to nominate their preferred beneficiaries. Contrary to general perception, trustees are not bound by such nominations.
Is there a valid binding nomination?
Anyone intending to make a claim for a superannuation death benefit should find out whether there is a binding nomination and, if there is, whether the strict pre- conditions for a valid nomination have been met.