What happens to a deceased person’s superannuation?

Published 27 Mar 2018

Superannuation funds ensure that Australians are well prepared for the financial challenges of not having an employment income stream after they retire.

In 2013-14, the average super balance for men and women aged 15 and over was $98,535 and $54,916, respectively, according to figures from the Association of Superannuation Funds of Australia. By retirement age, the pension pot has jumped to $292,000 for men and $138,50 for women.

But what happens to accumulated super when an individual dies? That depends on how much estate planning the deceased did before they passed away.

Binding and non-binding death benefits

In the unfortunate event that a person dies before they spend their super, the remaining money, along with any insurance payouts, is distributed to beneficiaries in the form of death benefits.

The way in which this is completed differs depending on whether or not the deceased made binding nominations. If so, the member’s super will be paid directly to whomever they chose as a beneficiary.

Binding nominations expire after three years, so if the deceased failed to update their wishes – or never chose binding nominees at all – the fund trustee will select a beneficiary on the deceased’s behalf.

These non-binding nominations will usually be either:

  • A dependent, such as a spouse or child;
  • An interdependent – a person with whom the deceased had a close personal relationship; or
  • The deceased’s estate.

If superannuation becomes part of a person’s estate, the money will be distributed according to their will and subject to inheritance disputes.

Can I challenge a death benefits decision?

People who believe death benefits have been distributed incorrectly, or feel they are entitled to a share of an individual’s accumulated super, can request a review of the decision.

The first step is to contact the fund directly within 28 days of discovering the death benefits outcome. The claimant will be expected to explain why they believe an error has been made and provide supporting documentation.

If the fund reaffirms its original decision, individuals can apply to the Superannuation Complaints Tribunal (SCT), again, within 28 days. Of the 211 matters the tribunal reviewed in 2016-17, more than one-quarter resulted in the original decision being overturned.

Do you need help pursuing a death benefits claim? Gerard Malouf & Partners Superannuation Lawyers are experts in handling multiple types of superannuation claim, so contact us today for a free consultation.

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