While both strategies can direct benefits to intended beneficiaries, they work very differently. As a result, the right choice often depends on family structure, SMSF governance, tax strategy and flexibility needs.
Reversionary Pension
With a reversionary pension, your pension automatically continues to your nominated beneficiary upon death.
Binding Death Benefit Nomination
With a binding or non-lapsing death benefit nomination, the trustee must follow your valid instructions when paying benefits.
Why This Matters
Importantly, the choice between these strategies may affect:
- Trustee discretion
- Estate certainty
- Transfer Balance Cap timing
- Tax outcomes
- Social security implications
Big Lesson
Although certainty is important, flexibility may also play a major role in effective estate planning. Therefore, the “best” option will often depend on balancing both objectives.
Reviewing Your Estate Planning and Superannuation Strategy?
The choice between a reversionary pension and a binding death benefit nomination can significantly affect estate certainty, tax outcomes, Transfer Balance Caps and family flexibility.
Because every family situation is different, the most appropriate strategy will depend on your personal circumstances, long-term goals and estate planning priorities.
Contact Us to discuss your superannuation and estate planning options.
Disclaimer and Warning
The information above is of a general nature only. It should not be used as a source to make financial decisions. It’s also important to note that the legislation and figures related to this topic tend to change regularly and therefore the information above may not reflect the current status. We recommend that if you are looking for advice on this matter, you should contact us.