When it comes to planning for the future, most Australians know the basics of superannuation. But ask about a non-binding nomination, and even savvy investors can look puzzled. In 2025, as super balances reach new highs and regulations continue to evolve, understanding this deceptively simple concept has never been more important. Here’s how non-binding nominations work, what’s changed recently, and why your choice can shape the financial security of those you care about most.
What is a Non-binding Nomination?
A non-binding nomination is a direction you give your super fund, indicating who you’d like to receive your superannuation death benefit if you pass away. Unlike a binding nomination—which obligates the trustee to follow your wishes—a non-binding nomination is considered a suggestion. The trustee will take your preferences into account but ultimately has the discretion to decide who receives your super, according to the fund’s rules and Australian law.
Key features in 2025:
- Non-binding nominations remain popular, especially for members who want flexibility or are unsure about future circumstances.
- They do not expire, unlike binding nominations, which typically require renewal every three years.
- Recent legislative tweaks have clarified trustee obligations, but discretion remains a core feature.
How Do Non-binding Nominations Work in 2025?
When you fill out a non-binding nomination form with your super fund, you list your preferred beneficiaries—typically your spouse, children, or other dependents. If you die, the trustee reviews your nomination, considers your relationships at the time of your death, and then makes a decision.
Some practical scenarios:
- Changed relationships: If your family situation changes (e.g., divorce, new partner), the trustee can adjust the distribution to reflect your current circumstances—even if you haven’t updated your nomination.
- Multiple dependents: Trustees often split the benefit between nominated dependents and others who may have become financially reliant on you.
- Estate planning flexibility: If there’s a dispute or complex family situation, the trustee’s discretion can help avoid rigid outcomes.
In 2025, the Australian Prudential Regulation Authority (APRA) has reminded trustees to actively investigate the member’s circumstances before distributing benefits, with a renewed focus on fairness and intent. This means your non-binding nomination acts as a guide, not a guarantee.
Pros and Cons: Is a Non-binding Nomination Right for You?
With so much at stake, should you opt for a non-binding nomination? Here are the main considerations for 2025:
- Pros:
- Flexibility: No need to renew regularly; adjusts to changing personal circumstances.
- Discretion: Trustees can make decisions that reflect your life at the time of death, not just what was on paper years ago.
- Suitable for complex families: Can be beneficial if your relationships or financial dependents are likely to change.
- Cons:
- No guarantee: The trustee may not follow your nomination if they believe another distribution is more appropriate.
- Potential for disputes: Family members may contest the trustee’s decision, leading to delays or legal proceedings.
- Lack of certainty: If you want absolute control, a binding nomination or a valid superannuation will is more appropriate.
2025’s regulatory landscape has seen the ATO and APRA increase scrutiny on trustee decision-making, aiming for more transparent processes and documentation. This is good news for members, but it’s still crucial to ensure your wishes are clear and up to date.
Real-world Example: The Impact of a Non-binding Nomination
Consider Sarah, a Melbourne-based professional who nominated her spouse as the preferred beneficiary in 2021. By 2025, her circumstances had changed—she’d separated from her spouse and was supporting a new partner and stepchild. Despite not updating her nomination, the super fund trustee, after a detailed review, distributed her death benefit between her current dependents and her former spouse, reflecting both her expressed wishes and her actual relationships at death. This discretion prevented a potentially unfair outcome but also underscored the importance of regular review.
What Should You Do Next?
Non-binding nominations offer both flexibility and uncertainty. In 2025, with regulatory changes giving trustees more guidance but not removing their discretion, it’s vital to:
- Review your nomination every year, especially after major life events.
- Ensure your super fund has your current details and relationships on file.
- Consider whether a binding nomination or superannuation will better matches your wishes for certainty.
