You can literally rest in peace if you have a superannuation interest when you die. Per regulation 6.21 of the Superannuation Industry (Supervision) Regulations 1994 (SISR), your superannuation provider is required to cash your superannuation interests to your beneficiaries or to your legal personal representative as soon as practicable. The payment of your superannuation interests after your death is called a superannuation death benefit.
Your dependant beneficiaries will be able to receive your superannuation death benefits as a superannuation lump sum that is paid out of the superannuation system, as death benefit income streams that are retained in the superannuation system or a combination of the two. For any other beneficiaries or a legal personal representative, superannuation death benefits can only be cashed as a superannuation lump sum that is paid out of the superannuation system.
A death benefit pension can be reversionary or non-reversionary. A ‘reversionary pension’ is a pension that continues after the death of the member by automatically reverting to a specified ‘pension dependent’, usually the deceased’s spouse.
To be a ‘pension dependent’ you must not only be a ‘dependent’ but also, in the case of a ‘dependent’ who is a child of the deceased member, be:
• less than 18 years of age; or
• be 18 or more years of age and less than 25 years of age and be financially dependent on the member; or
• have a disability of the kind described in subsection 8(1) of the Disability Services Act 1986
To find out more about the reversionary pension, watch Effective PD’s webinar on “Reversionary Pensions, Death Benefits and the $1.6 million Transfer Cap”. To subscribe, visit www.effectivepd.com.au. Effective PD offers an innovative way for busy accountants to be on top of their game with continuing professional development in a brief, flexible and easy way.
