Binding death benefit nomination and reversionary pensions

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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.

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