Question

Q8: Discussion Question
a. Discuss the ways in which death benefits can normally be paid by superannuation funds, and explain the duties of trustees when paying death benefits. b. What is the purpose of a binding death benefit nomination? What are the consequences and risks of having a non-binding death benefit nomination?
Learning objective 5

Answer 1

answer a) The death benefits by superannuation funds are simply payment all accumulation by a person on the hie/her death to nominee or nominees by the trust . The super fund trustee normally pays all death benefit to one or more of dependants.The benefit can be paid either a pension, a lump sum, or a combination of both.In case of a lump sum payment of benefit , it can be a single lump sum payment of all the fund , or in two parts an interim lump sum and a final sum. Incase of a pension form of   benefit, only tax dependants are eligible to be paid a in the form of a pension (income stream).

Further, a trustee is required to do documentation for payment of benefit to right person ,prepare and implement an Investment Strategy. Assure the timely payment of all sum and dues.Maintain the liquidity and safety of the fund forbenefit of reciever and its expected cash flow requirements.

answer B)

Binding nomination: A method of making nomination for recipent of the death benedit . The binding nomination leaves trustee with no choice as to who gets your death benefit.All or part of benifits are paid to pre-decided nominee .

The investors are free to choose whether the money goes to One or more dependants. Such nominations are valid only the member signed and dated the nomination form and deceased member was not under a legal disability at the time of making the nomination.

In case of non-binding nomination, the trustee will decide obout the distribution of the benefit . However, the trustee still has the final say, generally if any nominate doesn't have direct relation with the dead person . The trustee will not follow the instructions in will.

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