Super and estate planning
Form in which death benefits may be cashed
Benefits may be cashed in any one or more of the following forms:
- a single lump sum
- an interim lump sum (not exceeding the amount of the benefits ascertained at the date of death) and a final lump sum (not exceeding the balance of the benefits as ascertained in relation to the member's death)
- one or more pensions (subject to restrictions)
- rollover for the purchase of one or more annuities (subject to restrictions).
Restrictions on death benefit pensions and annuities
A member's benefits may only be paid in the form of pension or annuity to a dependent beneficiary of the member (subject to certain restrictions for children).
Child beneficiaries age 18 or more
If the dependant is a child age 18 or more, to pay a death benefit as an income stream, the child, at the time of death, must:
- be financially dependent on the member and less than 25 years of age, or
- have a disability that:
- is attributable to an intellectual, psychiatric, sensory or physical impairment or a combination of such impairments
- is permanent or likely to be permanent, and
- results in a substantially reduced capacity of the person for communication, learning or mobility; and the need for ongoing support services.
Otherwise, the death benefit must be paid to the child as a lump sum.
If death benefits are paid to a child of any age in the form of a pension or an annuity, the income stream must be cashed as a lump sum on the earlier of:
- the day on which the annuity or pension is commuted, or the term of the annuity or pension expires, and
- the day on which the child attains age 25 unless the child has a disability as described above.
Note: Refer to section 14.8 for the definition of child.
Commutation options for child death benefit pensions
|Commutation Option||Before age 25||At age 25|
|Commute as a tax-free superannuation lump sum||Yes - at any time||Yes - any remaining balance must be commuted by 25th birthday*|
|Commute and roll over to child's accumulation account||No||No|
|Commute and roll over to another income stream for the child||No||No|
* Unless the child has a disability as described above.
Last modified: Tuesday, May 2, 2017