Question 1

My wife and I are about to retire with strong super balances. I also have cash at the bank.

Prior to commencing a super-based pension, should we spend from our bank accounts?

Alternatively, should we transfer cash from the bank into super and then begin a super-based pension?

While you should always maintain a decent amount in your bank account(s), enough to cover day-to-day spending for a few months plus a buffer, there are numerous advantages in putting the bulk of your funds in super and, eventually, a superannuation pension.

The superannuation rules are so generous that there are caps on how much you can contribute each year and how much you can have in a superannuation pension, called your “transfer balance cap”.

The cap is $2 million for 2025-26 and is being indexed to $2.1 million at the start of 2026-27 financial year.

I have previously explained how this works.

The advantages of a superannuation pension include:

• Significant tax advantages. All payments are tax free. All earnings are tax free.
• Flexible. You can draw as much out as you want, including lump sums, at any time. Note there is a minimum withdrawal requirement that rises as you age.
• Investment choice. You will have a wide selection of investments, from cash, conservative to highly aggressive.
• Regular income. Most people find it easier to manage their budget and cashflow by getting paid a regular income. This makes sense as during your working years you were paid a regular salary.

You need to be mindful of the non-concessional contribution caps and make sure you set up your finances in a way that suits you both. Perhaps speak with your super fund or financial adviser.

Question 2

Could you please provide details of how a superannuation fund would process the following situation:

The husband has an income account with both a reversionary beneficiary and a binding death nomination. The nominated person on both is his wife.

He has appointed an executor and there is a will,

The wife has an accumulation account with a binding death momination in place. The nominated person on that account is her husband. She has appointed an executor and has a will.

Should both the husband and wife die simultaneously, how would the fund process the accounts once the executor for both wills makes contact?

Thank you!

This is where a good estate planning specialist can help. I’ve again asked Ann Janssen the founder of Estate First Lawyers to provide us with some help. She has provided us with the below response:

It is very good that both the husband and the wife have will, along with their reversionary pension and binding death nominations.  All super funds have different rules surrounding death benefit nominations and this has to be kept in mind when answering this question. 

However, the general answer is that if there is a binding death benefit nomination, the super fund is bound by it (as the name suggests). The fund rules will determine whether the reversionary nomination or the binding nomination take precedence. In this example, the nominee is one and the same, so it does not matter.

Most funds allow only a one-tier nomination – in this case, a back-up nominee is not allowable, within the fund’s nomination form (for example, if the nominated spouse was to pass away first, there is no fallback nominee. The nomination fails and the super fund member must do a new nomination).

In the scenario above, both spouses die simultaneously (such as in a car accident or a plane crash). Therefore, there are no nominations in place for either party. The death benefit is then subject to the particular super fund’s rules.

Usually the position is that the super fund trustees have the discretion to distribute each member’s death benefit to one or more of the superannuation eligible dependants for that deceased member (as listed in the legislation) or to the deceased member’s estate (in the latter case, this would then flow through to the will).

In most situations, the super fund does not have to pass the death benefit into the estate. Fund members need to ensure their estate plan covers both their will and their superannuation, knowing that their wishes may not be followed if a nomination fails. Expert estate planning can go a long way in catering for this situation to ensure that your testamentary wishes are still effected.

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.