Transfer balance cap
Modified transfer balance cap rules for death benefits
Transfer balance cap for child beneficiaries
Where an eligible child receives a death benefit income stream from their parent, a modified transfer balance cap rule applies. This ensures that the child's own transfer balance cap at retirement is not impacted by the receipt of the pension from their parent.
Transfer balance cap for adult beneficiaries
From 1 July 2017, a surviving spouse or other eligible dependant (other than children) in receipt of a superannuation death benefit pension will have the value of that death benefit pension added to his or her transfer balance account.
Essentially what this means is that a surviving spouse does not inherit his or her spouse's transfer balance cap.
Value of death benefit income streams for transfer balance cap
The value that would count towards the recipient's transfer balance account is:
- For existing retirement phase death benefit income streams: the value at 30 June 2017.
- For new retirement phase death benefit income streams commenced on or after 1 July 2017: the value at commencement.
Timing of transfer balance credit for death benefit income streams
Where an income stream automatically reverts to a nominated beneficiary on the death of the original recipient, the value of the pension as at the time of death will count as a credit to the beneficiary's transfer balance account.
However, to give the beneficiary time to arrange their affairs, the credit will be deferred and will not arise in the beneficiary's transfer balance cap until 12 months from the date of death.
It should also be noted that this rule also applies where a pension reverted to a member's beneficiary prior to 1 July 2017. For example, where a pension reverted to a member's beneficiary on 1 October 2016, a credit will not arise in the beneficiary's transfer balance account until 1 October 2017.
Where a pension reverted to a member's beneficiary more than 12 months prior to 1 July 2017, the value of the pension at 30 June 2017 will be credited to the beneficiary's transfer balance account on 1 July 2017.
Non-reversionary death benefit pensions
The delay of the transfer balance credit is not available where the death benefit pension does not automatically revert to a reversionary beneficiary. Where a beneficiary commences to receive a death benefit pension upon the death of a member, the starting value of the new pension will be credited to the beneficiary's transfer balance account.
Last modified: Friday, January 12, 2018