First State Super Logo


Super and estate planning

Form in which death benefits may be cashed

Section: 14.5

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