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Nominating a beneficiary

Superannuation can often form a significant part of an individual’s wealth. Therefore, the transfer of such an asset upon their death can potentially cause dispute among the deceased’s family and potentially others.

Unlike assets owned in an individual’s personal name, superannuation does not form a part of their estate when they pass away. Instead, it can pass directly to a beneficiary rather than via a Will. However, this depends on who the beneficiary is and how the nomination was made.

Under superannuation laws, a nominated beneficiary must fall within at least one of the following categories of dependants:

Broadly speaking, beneficiary nominations can be binding or non-binding.

Binding nominations compel the trustee to act on the deceased member’s instructions (provided the nomination is valid). While the trustee must pay the beneficiaries nominated in such a manner, the form of the payment is still left to the discretion of the trustee.

If a deceased individual’s family is blended or has a history of conflict, a binding nomination may be the most appropriate option, as it ensures that the designated beneficiary is provided for according to the deceased member’s specific wishes.

A non-binding nomination is not compulsory for the trustee to follow, and the trustee would use this nomination as a guide in paying out the member’s balance upon their death. Non-binding nominations can provide more flexibility for planning to achieve the most tax effective outcome, especially when the beneficiaries receive different tax treatment.

Posted on 21 October '15 by , under Super.

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Transition to retirement

The transition to retirement (TTR) strategy allows you to access some of your super while you continue to work.

You are able to use the TTR strategy if you are aged 55 to 60. You can use it to supplement your income if you reduce your work hours or boost your super and save on tax while you keep working full time.

  • Starting a TTR pension: To start your TTR pension, transfer some of your super to an account-based pension. You have to keep some money in your super account so that you can continue to receive your employer's compulsory contributions as well as any voluntary contributions you may be making.
  • Government benefits and TTR: The benefits you or your partner receive might be impacted if you choose to opt for this strategy. How and what exactly will change might become clearer upon discussing this with a Financial Information Service (FIS) officer.
  • Life insurance and TTR: In some cases, the life insurance cover you have with your super may stop or reduce if you start a TTR pension – check this before making any decisions or changes.

TTR can help ease your mind as you transition into retirement but it can be a bit complex. Before you choose whether you want to use TTR to reduce work hours or save on tax, or even if you want to use TTR altogether, you should figure out how this will impact all aspects of your finances.

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