Pulse Spotlight: At least 6.5 million Australians won’t have a say in who inherits their super 

Summary

Super Consumers Pulse 2024 has found that 36% of Australians with superannuation say that they haven’t told their fund who should receive their super if they pass away. Only a quarter report that they have made a binding death benefit nomination. 

But the regulator has found that just one-in-ten people have a binding nomination, casting doubt on whether people understand the process.

Super Consumers Pulse survey found that 36% of Australians with super report that they haven’t made a death benefit nomination. This translates to approximately 6.5 million super members (Trend toward single account, ATO, September 2024) who haven’t yet made a nomination, despite this group having an average of $101,000 in super, plus insurance benefits (ATO, Taxation Statistics 2021-22 Individuals sample file). 

Another Pulse 2024 finding shows that while death benefit nominations are more common amongst older people, there are still important gaps. One quarter of 45-54 year-olds still haven’t made any nomination, despite the average account balances for this age-group being $149,000, and only 54% of people aged 65-74 years know they have made a binding nomination.

ASIC’s recent death benefits review found that people are currently at risk of lengthy delays in death benefits being paid to their family: see ASIC Report 806: Taking ownership of death benefits: How trustees can deliver outcomes Australians deserve (31 March 2025). ASIC found that having a valid death benefit nomination made the payment process significantly faster. Due to poor system design, people are also at risk of their death benefit not being paid in accordance with their wishes. The death benefit system needs an overhaul to ensure the right people receive the money when you pass away and that it happens in a timely way.

Super Consumers Australia is calling on the Federal Government to undertake an independent review of how the super death benefit system is working. An independent review could get to the bottom of whether the system is fit for purpose and work out how it could be improved. 

What is a death benefit nomination?

When a person passes away with super, their super fund must pay the deceased member’s super balance and any insurance payout to the person or people entitled to it. There are fairly strict legal rules about who can be an eligible beneficiary: See: “Where does your super go when you die?” (Super Consumers, June 2025). Most funds allow their members to tell the fund who they want the fund to pay their super to after they die. This is called a death benefit nomination. 

There are two types of death benefit nominations: ‘binding’ and ‘non-binding’. A binding nomination means your super fund must pay the money to the people you nominated, and in the amounts or proportion you chose. This is a legally binding instruction: so long as the nomination is valid under the law, the fund must follow it.

A non-binding nomination tells your fund your wishes, but your fund has some discretion where to pay your money based on the circumstances at the time of your death. The super fund may consider other factors (such as any dependants) when deciding who receives the death benefit.

In most cases, this means without a valid binding nomination, funds have discretion on how the benefit is distributed among the eligible beneficiaries.

There are differences on how binding and non-binding death nominations are made. 

There are no laws about how to make a non-binding nomination. Funds often allow members to complete a nomination on the fund’s website. While making a non-binding nomination is often pretty easy, it’s not always the best option. ASIC’s review found that funds process death benefits for non-binding nominations the slowest – slower than having no nomination at all (Report 806, Table 10).

For most funds, to make a valid binding nomination, you need to carefully complete a paper form and sign it in the presence of two witnesses who are not named in the nomination and who also need to sign the form. Then you need to mail it to the fund. Most binding nominations also lapse or expire after up to three years. While the law allows you to renew online, not all funds support online renewals. That means going through the whole paper process all over again.

Some funds have started to offer a new kind of binding nomination that does not lapse or expire. Each fund that offers this kind of nomination has its own rules for how they work, but some funds allow them to be made online. 

How many people are making death benefit nominations?

We found:

• 24% of Australians are sure they have made a binding nomination,
• 36% of Australians are sure they haven’t made any nomination,
• 25% have made a nomination, but don’t know whether it was binding or non-binding,
• 10% are sure they’ve made a non-binding nomination.

See Figure 1 for a breakdown of member responses about their nominations. 

Figure 1. Member death benefit nominations in super

Question: Have you ever nominated at your super fund the people you want to receive your super when you pass away? This person is called a ‘beneficiary’. n = 1,366Note: see Table 1 below for the data shown in this figure (accessible version).

But ASIC’s recent report found that only 12% of the living members included in their review had a binding nomination (ASIC Report 806, Table 8). ASIC also found that 31% of living members had a non-binding nomination compared with only 10% of consumers who told us they were sure they had a non-binding nomination. While the sample groups and sizes for these two studies are not the same, both studies were designed to be broadly and nationally representative. The substantial differences in results suggests that some consumers may think they have a binding nomination when they actually have non-binding one. Indeed, one quarter of consumers told us they didn’t know what kind they had. It’s also possible that some consumers believe they have a valid nomination in place, when in fact it has expired.

Death benefit nominations aren’t required when members join super funds. It’s up to each individual member to find time to make their death benefit nomination and keep it up to date. Given the consequences of not having a nomination and the complexity involved, super funds should be doing a lot more to help members make a nomination and keep it up to date. 

Who is making death benefit nominations?

Figure 2 shows the percentage of Australians who have not made any death nomination by age group and the associated average balance at APRA regulated super funds. 

Among people under 25, around 4 in 5 people haven’t made any death benefit nomination. The percentage of people making death benefit nominations increases with age; however, there is still a sizable cohort of over-45-year olds who still have not made any nomination. For instance, in the 45-54 age range, around a quarter of Australians still haven’t made any death benefit nomination, despite the average super balance for this group being $149,000: see APRA Quarterly superannuation industry publication (June 2024).

Figure 2. Percentage of Australians who haven’t made a death benefit nomination and average super account balances by age

Question: Have you ever nominated at your super fund the people you want to receive your super when you pass away? This person is called a ‘beneficiary’. n = 1,366  Note: see Table 2 below for the data shown in this figure (accessible version).

Do people know the difference between a binding and non-binding death benefit nomination?

An alarming number of Australians weren’t sure if their nomination was binding or non-binding (see Figure 3). We found:

• Between 32% and 51% of people over 45 years old weren’t sure what type of nomination they gave their super fund.
• Even in the oldest age group (over-65s), only 54% knew they had made a binding nomination.

Not knowing whether your death nomination is binding is a serious issue. In addition to additional delays, the fund may not pay your super to the person you want them to. An analysis of death benefit complaints made to the Australian Financial Complaints Authority (AFCA) shows that AFCA almost always disregards the wishes of the deceased contained in a non-binding nomination and makes a decision based on dependency or the legal standing of any will, in that order: see Barkley, T and Li, X, “An Empirical Study of the Distribution of Superannuation Death Benefits” (2024). Having no nomination or a non-binding nomination in place means that the super fund is likely to make its own decision about who to pay based on the circumstances at the time of death.

Figure 3. Types of death benefit nominations – binding, non-binding, or not sure – by age

Question: Can you remember if the nomination was binding or non-binding?  Made a death benefit nomination – n = 816

Note: see Table 3 below for the data shown in this figure (accessible version).

Is it easy to make a death benefit nomination?

We found more than 90% of people who made a nomination found the process easy to navigate (Figure 4). 

This finding should be carefully interpreted. The high degree of uncertainty about whether someone had made a binding or non-binding nomination may be a better indicator of the ease of understanding and the process more generally. While most super funds undertake some checks of binding nominations when they are received, whether or not a nomination is valid depends on the circumstances at the time of a member’s death. For example, a child may meet the definition of ‘dependant’ when the nomination is first made, but may be independent when the member passes away. .

Not having a valid binding death benefit nomination can lead to delays and disputes. In the last financial year, AFCA received 708 complaints about death benefits in super. It’s the third-most complained about area in super, behind account administration and insurance (AFCA Annual Review, 2023-24)

Figure 4. Ease of nominating a super beneficiary by type of nomination

Question: How would you describe your experience nominating a super beneficiary? n = 816Note: see Table 4 below for the data shown in this figure (accessible version).

So what’s the solution?

With only one in four superannuation members sure they have a binding nomination – and ASIC’s report casting doubt on whether that is the reality – super funds should do more to prompt members to complete a binding nomination and clearly communicate to members why it is important they have a binding nomination. 

Failure to do this risks exposing family members and financial dependants to what can become a lengthy and traumatic process to divide up the money.

Super Consumers Australia has highlighted in the past that it can be very complicated to correctly nominate a super beneficiary: see e.g. Super Consumers Australia, Superannuation death benefit nominations” (2022).. ASIC has also found many funds could do much better at making the nomination process simpler: see ASIC, Improving superannuation member services — Dealing with death benefit claims” (May 2024). 

Superannuation death benefits are governed by a complex web of Federal, state and territory  laws in addition to the complicated and inconsistent governing rules of each super fund: see ASIC Report 806, Appendix C: Legislative framework. Grieving beneficiaries shouldn’t have to jump through so many hoops to find and claim any super they might be entitled to receive. 

Super Consumers Australia is again calling on the Federal Government to undertake an independent review of how the super death benefit system is working. This should test whether the system is fit for purpose and develop improvements.

About the survey

This research note was part of Super Consumers’ Pulse 2024 survey. The sample was made up of 1,526 respondents aged between 18 and 75 years old who completed the survey between 14 May 2024 and 24 May 2024. The survey respondents were sampled to be representative of the Australian population on the basis of age, gender, and location. 

Accessible versions of figures

Table 1. Member death benefit nominations in super

Death Benefit Nomination	Percentage of Responses
Made a death benefit nomination (all types)	59%
Binding death benefit nomination	25%
Non-binding death benefit nomination	10%
Don’t know the type of death benefit nomination	24%
No death benefit nomination	36%
Don’t know if made any death benefit nomination	5%

Note: This is the data shown in Figure 1.

Table 2. Percentage of Australians who haven’t made a death benefit nomination and average super account balances by age

Age	Average super balance (APRA, June 2024)	Percentage with no death benefit nomination
18-24 years	$7,000	79%
25-34 years	$35,000	50%
35-44 years	$88,000	28%
45-54 years	$149,000	24%
55-64 years	$220,000	18%
65-74 years	$269,000	15%

Note: This is the data shown in Figure 2.

Table 3. Types of death benefit nominations – binding, non-binding, or not sure – by age

Age	Percentage with binding nominations	Percentage with non-binding nominations	Percentage that were not sure
18-24 years	41%	23%	36%
25-34 years	37%	25%	38%
35-44 years	41%	13%	46%
45-54 years	32%	17%	51%
55-64 years	44%	17%	39%
65-74 years	54%	14%	32%
All	41%	17%	42%

Note: This is the data shown in Figure 3.

Table 4. Ease of nominating a super beneficiary by type of nomination

Death Benefit Nomination	Very easy to navigate	Somewhat easy to navigate	Somewhat difficult to navigate	Very difficult to navigate
Binding	66%	27%	4%	1%
Non-binding	55%	39%	5%	0%
Don’t know	56%	30%	4%	1%

Note: This is the data shown in Figure 4.

This research was supported by a philanthropic grant from Ecstra Foundation. Ecstra is committed to building the financial wellbeing of Australians within a fair financial system.