By Colin Lewis, Head of Strategic Advice, Fitzpatricks Advice Partners
August 2026

Super Consumers Australia estimates more than 15.7 million of us have no binding death benefit nomination for our super.

They surveyed 5,000 people last year and found 67 per cent had not been contacted by their fund in the previous 12 months about making a legally binding nomination; only 13 per cent said they had one.  Applied to the roughly 18 million Australians with super, it leaves about 15.7 million without.

It was reported in the media as a crisis.  ABC News headlined “More than 15.5 million Australians could have no say in who inherits their superannuation”.

If you don’t have a binding nomination, the trustee of your fund decides who gets your benefits, including any insurance, when you die.

It is a problem, but not the one it appears to be.

Super funds have certainly done a poor job of letting members know they should have one set up, but the conclusion many will draw from the coverage is that everyone needs a binding nomination.

Used in the right circumstances a binding nomination is invaluable, but it should not be a default setting.  Not having one is no reason on its own to panic.

Where your super fits in

Your super is not an estate asset, meaning it’s not dealt with by your will, unless you, or your fund’s trustee using its discretion, direct it to your legal personal representative, generally the executor of your estate.

Only certain people can receive your super directly from the fund: your spouse (including de facto partner), your children of any age, someone financially dependent on you, or someone with whom you are in an interdependent relationship.

If you want your super to go to anyone else – a sibling, parent, niece (as the case featured in ABC News) or charity – it must go via your estate.  That means nominating your legal personal representative and having a will.  Far too many Australians have neither.

Where a binding nomination earns its keep

Binding nominations matter in blended families.  You may want your super going to your current spouse rather than adult children from a previous relationship because it is more tax effective or because the children are estranged.  Alternatively, you may want the certainty of your super going to your kids to the exclusion of your current partner because you’ve made alternative provision for them in your will.

They matter if you’re worried your estate could be challenged and you don’t want your super exposed.  That applies everywhere except NSW, where notional estate provisions can pull assets back in.

They matter where a beneficiary should not receive a large sum directly, because they’re a minor, a spendthrift, have a gambling or drug problem, or because you do not want the money landing with their spouse if the relationship ends.

A nomination in favour of your legal personal representative puts the money into your will, where you control it.

There’s also the tax argument.  Adult children generally must take your super as a lump sum.

Paid through your estate rather than directly from the fund, the death benefit is taxed in the estate.  That saves them the 2 per cent Medicare levy and keeps the amount out of their taxable income, avoiding flow-on tax and Centrelink consequences.  If you go down this path, have super expressly carved out in your will so your executor can work out the tax treatment.

With an SMSF, the bigger question is control; whoever controls the fund after your death decides how and to whom benefits are paid.  A valid binding nomination helps, but it is not enough on its own if you have not passed control to someone trustworthy.

The case for leaving the decision to the trustee

A binding nomination provides certainty, and certainty is exactly the problem when your life changes and the paperwork doesn’t.

A valid binding nomination must be acted on even if your circumstances have changed.

Some funds don’t offer binding nominations at all.  Most that do offer lapsing nominations that expire after three years, so one signed and forgotten may already be worthless.

If you’re legally married but separated and living with a new partner, a binding nomination in favour of your estranged spouse will be honoured, whatever you intended.

Trustee discretion works the other way.  The trustee looks at your circumstances at the date of death, not the date you signed a form.  A non-binding nomination still tells them what you wanted; it guides the decision without locking it in.

If you’re not in a blended family, your relationship is stable, family relations are amicable and your wishes are unlikely to be contested, you can be reasonably confident your super will go where you want it without a binding nomination.

A great many of the 15.7 million Australians mentioned above may be in exactly this position.  For them, the absence of a binding nomination is not a problem.

Pensions change things again

If you’ve nominated your spouse as a reversionary beneficiary on a super pension, the pension does not stop when you die and simply continues to your spouse.  No death benefit arises, so no death benefit nomination is required.  But your spouse will need to make one when the time comes because the pension ceases when they die and a death benefit arises then.

A non-reversionary pension ceases on death, and the balance becomes a death benefit, so a nomination is required.

Where a binding nomination conflicts with a reversionary pension, the pension generally prevails, though it depends on your fund’s governing rules.

Making a pension reversionary should not be automatic either.  Like a binding nomination, it needs to fit in with your estate plan.

What the numbers actually show

The real issue in the Super Consumers numbers is not that 15.7 million people lack a binding nomination.  It’s that most may not have given much thought to what happens to their super when they die, and many who have made a nomination may not realise it’s invalid having named say a parent (common among young people first starting out in the workforce) or a niece (as featured in ABC News).

Many will have no will.

Decide who should get your money, then work out whether certainty or flexibility serves that decision better.

For some people the answer is a binding nomination, and for them it is essential.  For plenty of others a non-binding nomination, a reversionary pension or a well-drafted will does the job.

What matters is that you have made the call rather than left it to chance.