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Binding death benefit nomination and reversionary pensions

It can often be quite confusing working out what will happen to your super when you die since the terminology surrounding superannuation and death can appear quite technical.

A binding death benefit nomination (BDBN) is an instruction by a fund member regarding who can receive the fund member’s super benefits when they die. Having a BDBN in place can provide peace of mind to a fund member as the fund must follow these instructions upon their death.

Those who are nominated by the fund member receive a death benefit, which is a payment from the superannuation fund. It can take the form of a lump sum payment or in the form of a pension.

For a BDBN to be binding, members must nominate their benefit to be paid to one or more dependants. A dependant can be a spouse, a child of the spouse or anyone who has an interdependent relationship with the member.

A reversionary pension is a pre-existing pension that is payable to a dependant (reversionary beneficiary) upon the death of the primary pension fund member. A reversionary pension is not a new pension; it is a redirection of the existing pension to the reversionary pensioner.

Reversionary pensions are typically paid to surviving spouses.

Reversionary pensions work in a similar way to a BDBN. This means that creating a separate BDBN is only necessary when a reversionary pension direction is not in place and a fund member wants more control over what happens to their super benefits after death.

Posted on 20 January '16 by , under Super.

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What to consider when consolidating your super

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds' policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

  • Exit fees
  • Insurance policies
  • Investment options
  • Ongoing service fees
  • Performance of the funds

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready:

  • Your tax file number.
  • Proof of identity. This could include your driver's license, birth certificate or passport.
  • Your fund's superannuation product identification number (SPIN).
  • Your fund's unique superannuation identifier (USI).
  • Details of your previous fund.

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