Written by: Angelica Adhar If you’ve lost someone close to you, understanding what happens to their superannuation is an important step in settling their financial matters. Claiming deceased superannuation involves working with the super fund’s trustee, who decides who receives superannuation death benefits under the fund’s rules and Australian superannuation law.
In this guide, we explain who can claim a super death benefit, how to lodge a claim, how long it takes, how tax is calculated, and what to do if your claim is delayed or disputed.
What is a superannuation death benefit?
A superannuation death benefit is the money paid out from a person’s super fund after they die. It generally includes two parts:
- The balance of the deceased’s super account
- Any insurance cover attached to the account, such as life insurance or total and permanent disability (TPD) cover that pays out on death.
The fund pays the benefit to the person’s dependants or to their legal personal representative.
How insurance affects the death benefit
Under Australian superannuation law, MySuper default products must provide death cover on an opt-out basis once a member is at least 25 years old and has an account balance of $6,000 or more. The insurance payout often forms a larger part of the death benefit than the account balance itself. Where a person held death and total permanent disability insurance through their super, both forms of cover may pay out as part of the death benefit.
The benefit can be paid as a lump sum, as an income stream, or as a combination of both. Lump sums are the most common, but eligible dependants can sometimes choose to receive the benefit as an ongoing pension instead. The trustee of the super fund decides how the benefit is paid, taking into account the deceased’s nomination, the rules of the fund, and superannuation law.
For example, a person who held the same super account for 20 years may have an account balance of around $80,000, with default life insurance cover of several hundred thousand dollars attached. Without knowing the cover existed, their family could lodge a claim assuming the death benefit is only the account balance, and miss out on a significantly larger payment.
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Who can claim a super death benefit?
Only two groups of people can receive a super death benefit directly from a super fund: dependants of the person who died, and the legal personal representative of their estate.
The trustee of the super fund decides which of these to pay, based on the fund’s rules, any nomination the member made before they died, and Australian superannuation law.
Who counts as a dependant under superannuation law?
Under section 10 of the Superannuation Industry (Supervision) Act 1993, a dependant of a deceased member includes:
- A spouse, including a de facto partner and a same-sex partner
- A child of the member, of any age, including step-children and adopted children
- A person in an interdependency relationship with the member, meaning a close personal relationship where they live together and provide each other with financial, domestic, and personal support
- A person who was financially dependent on the member at the time of death.
A trustee can pay the death benefit to one or several of these dependants (also called a SIS dependant), divide or pay it to the legal personal representative of the estate.
What if there are no dependants?
If the person who died had no SIS dependants, the trustee generally pays the death benefit to the legal personal representative of the estate. The benefit then forms part of the estate and is distributed according to the will.
For example, a single person with no spouse, no children, and no one financially dependent on them may leave their super to their elderly mother through their will. Because a parent is not automatically a dependant under super law, the trustee cannot pay the benefit directly to the mother. Instead, the trustee pays the benefit into the estate, and the executor distributes it under the terms of the will.
Key takeaway
Most Australians have life insurance attached to their super account without realising it. The first step when claiming a death benefit is to request the person’s most recent super statement, which shows the account balance, the level of insurance cover attached, and whether the cover was active at the time of death.
How do you make a death benefit nomination?
A death benefit nomination tells your super fund who you want your benefit paid to when you die. The type of nomination you choose determines whether the trustee must follow your instructions or can decide who receives the benefit.
The four main types of nomination are:
| Type of nomination | Does the trustee have to follow it? | Expiry | How it works |
|---|---|---|---|
| Binding nomination | Yes, if valid at the time of death | Three years from the date you sign it | The trustee must pay your benefit to the dependants you have named, in the proportions you have set |
| Non-lapsing binding nomination | Yes, if valid at the time of death | No expiry, but the fund’s rules must allow it | Works the same as a binding nomination, but does not need to be renewed every three years |
| Non-binding nomination | No | No expiry | The trustee considers your wishes but makes the final decision, taking into account the fund’s rules and superannuation law |
| Reversionary nomination | Yes, if the nominee is an eligible dependant at the time of death | No expiry | Used for income streams already being paid; the pension automatically continues to the named beneficiary |
A binding nomination made through an APRA-regulated super fund expires three years after you sign it. You must renew it every three years to keep it in place. For example, a couple in their forties may each lodge a binding nomination naming the other as their beneficiary. If they forget to renew the nomination after three years and one of them dies during that lapsed period, the trustee is no longer bound to follow the nomination and instead decides how to pay the benefit, taking into account the fund’s rules and any other potential dependants.
Key takeaway
A binding nomination is generally the most direct way to make sure your super goes where you want it to go. Many funds also offer non-lapsing binding nominations, which do not expire, though the fund’s rules must allow this option.
How long does a death benefit claim take?
Most superannuation death benefit claims take between two and six months to finalise from the date the claim is lodged. Claims with a valid binding nomination and complete documents can be settled sooner, while disputed claims or those involving multiple potential beneficiaries often take longer than six months.
How long this takes depends on the type of nomination in place, the completeness of the supporting documents, and whether more than one person is claiming the benefit.
Reasons for delays
Common reasons a death benefit claim takes longer include:
- No valid binding nomination at the time of death
- More than one person claiming the benefit
- A disputed relationship, such as a de facto partner the fund did not know about
- Missing or inconsistent documents when you lodge the claim
- Insurance attached to the account, which adds a separate assessment by the insurer.
Where more than one person is claiming the benefit, the trustee will notify each person of the proposed decision before making payment, and other people have time to object.
How to claim a superannuation death benefit
The steps you take after a person dies and the documents you provide to the super fund can make a significant difference to how quickly the death benefit is paid.
Step-by-step, here’s how the claims process works:
- Locate the super fund or funds the person held. Check their most recent tax return, payslips, bank statements, or member statements. If you cannot find the details, the person’s former employer or the Australian Taxation Office can help identify the fund.
- Contact the super fund to notify them of the death. The fund will assign a case manager and send a claim pack outlining the documents you need to provide.
- Submit the death certificate and a completed claim form. Most funds require a certified copy of the death certificate along with the claim form they provide.
- Provide identification and proof of your relationship to the person who died. This may include your own identification, a marriage certificate, a birth certificate, or other documents that confirm your relationship.
- Provide a copy of the grant of probate or letters of administration, if you are claiming as the legal personal representative of the estate.
- Wait for the trustee’s assessment. The fund will review the claim, check the nomination if one was in place, and consider whether any other people may be entitled to the benefit.
- Receive the trustee’s decision. Where more than one person may be entitled, the trustee will notify each person of the proposed decision and allow time for any objections before payment.
If the person had insurance cover attached to their super account, the fund will lodge a separate claim with the insurer. The insurer assesses whether an insurance amount is payable, and if accepted, the fund adds the amount to the death benefit before the trustee makes the final decision on who receives it.
Where a person dies with two super accounts held at different funds, each fund runs its own claim process. You will need to contact both funds separately, submit a death certificate to each, and complete each fund’s claim forms.
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How is a superannuation death benefit taxed?
Tax on a superannuation death benefit depends on whether the person receiving it is a tax dependant of the person who died, and how the benefit is paid.
How a super death benefit is taxed depends on your situation:
| Your situation | How tax applies |
|---|---|
| Tax dependant receiving a lump sum | The whole payment is tax-free |
| Non-tax dependant receiving a lump sum | The taxable component is taxed at a maximum of 15 per cent plus the Medicare levy on the taxed element, and 30 per cent plus the Medicare levy on any untaxed element |
| Paid to the estate | The estate pays tax based on who ultimately receives the benefit. The Medicare levy does not apply to payments made through the estate |
A dependant under super law does not always mean you are a tax dependant. A child of any age is a dependant under super law, but only a child under 18 is a tax dependant under the Income Tax Assessment Act 1997. An adult child can receive a super death benefit directly from the fund, but still pay tax on the taxable component.
For example, where a person dies and leaves their super to their 22-year-old child, the fund can pay the benefit directly to the child under super law. Because they are over 18 and not financially dependent on their parent, they are not a tax dependant, and the taxable component of the payment is taxed at up to 15 per cent plus the Medicare levy.
What if there's a superannuation death benefit dispute?
If you disagree with the trustee’s decision about a superannuation death benefit, you have three options to challenge it: object to the proposed decision before payment, lodge a complaint, or commence court proceedings. Most death benefit disputes resolve through one of the first two.
Each option is generally taken in order, with the objection window completed before the Australian Financial Complaints Authority (ACFA) accepts a complaint, and considering the matter before court proceedings are appropriate.
Here’s what to do if you want to challenge the trustee’s decision:
Object to the trustee's proposed decision
Where more than one person may be entitled to the benefit, the trustee will write to each person setting out the proposed decision before making payment. You have around 28 days to lodge a written objection.
In your objection, address why the proposed decision is wrong and provide additional evidence about your relationship to the person who died, including evidence of financial support, joint expenses, or your interdependency relationship.
Lodge a complaint with AFCA
If the trustee’s final decision goes against you, you have 28 days from the date of the decision to lodge a complaint with the AFCA. AFCA is a free, independent body that handles complaints about superannuation funds and insurers, and its decisions on superannuation disputes bind the trustee.
AFCA reviews whether the trustee’s decision was fair and reasonable in the circumstances. The process generally starts with conciliation, where AFCA helps the parties reach agreement. If conciliation does not resolve the matter, an AFCA ombudsman issues a binding determination, which can affirm the trustee’s decision, set it aside, or send it back to the trustee to reconsider.
Commence court proceedings
Court proceedings are generally a last resort, used where AFCA has not resolved the matter or where the dispute involves a self-managed super fund, which falls outside AFCA’s jurisdiction. AFCA determinations can also be appealed to the Federal Court.
When should you contact a superannuation lawyer?
Speaking to a superannuation lawyer early can help you avoid the delays and disputes that affect many death benefit claims. This includes claims where there is no valid binding nomination, where more than one person may be entitled, or where the trustee’s decision goes against you.
A superannuation lawyer can:
- Confirm whether you are a dependant under super law and a tax dependant under tax law, and explain how each applies to your claim
- Identify any forgotten or inactive super accounts held by the person who died, including any insurance cover attached to those accounts
- Prepare and submit your claim, including the supporting documents and evidence the trustee needs
- Lodge an objection to a proposed decision or a complaint with AFCA on your behalf
- Manage communication with the super fund and respond to requests for further information
- Advise on whether the benefit should be paid directly or through the estate, and how that affects the tax outcome.
If a death benefit claim is delayed or disputed, seeking legal advice early can help you respond before the decision is finalised and give your claim the strongest chance of being paid as the person who died intended.
