New findings from Super Consumers Australia show an estimated 15.7 million Australians may not have a binding death benefit nomination. An RMIT expert explains why this exposes a major gap between what people think they are doing with their retirement savings and what the law actually allows them to control.
Professor Angel Zhong, School of Economics, Finance and Marketing:
"Many Australians assume that if they have written down who they want to receive their money, their wishes will automatically be followed. Superannuation does not work that way.
"This is a financial literacy problem, but it is also a design problem. We cannot expect consumers to understand a complicated legal distinction between binding and non-binding nominations if funds are not making that distinction clear and prompting members to act.
"For something as important as deciding who receives your lifetime savings, relying on passive communication is not enough. Super funds should be actively prompting members at key life events and making the process simple.
"The lesson for Australians is simple: do not assume your will tells your super fund what to do. Check your nomination, make sure it is legally binding if that is what you intend, and check whether it needs to be renewed."
Dr Angel Zhong is a Professor of Finance, specialising in global financial markets, behaviour and trends.
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