Death & Terminal Illness Benefits

When you die, your super fund trustee normally pays your death benefit to one or more of your dependants or to your estate.

For super death benefit purposes, the term ‘dependants’ includes:

·        Your spouse (this includes same-sex de facto partners)

·        Your children (any age)

·        People with whom you had an interdependency relationship

·        People who depend on you financially

A reversionary pension beneficiary is the person nominated to get the member’s pension after they die. They’re not entitled to any super that remains in accumulation phase. They merely take over the income stream that is the pension.

The death benefit beneficiary is the person nominated to get the member’s super entitlements after they die. The two need not be the same.

For people dying from 1 July 2017 anti-detriment payments will no longer be made

There is no entitlement to an anti-detriment payment if the death benefit is not taken as a lump sum. For more information on ‘anti-detriment payments’ refer to the links below.

In deciding whether to take a death benefit as a lump sum, or an income stream, the value of any ‘anti-detriment payment’ payable with the lump sum should be weighed up against the benefits of receiving an income stream. It may be better to receive a death benefit in the form of a superannuation income stream because the receipt of an income stream may result in better Centrelink, aged care income tested fee and income tax benefits. The individual’s circumstances will decide which is best.

From 1 July 2008

Your ‘spouse’ includes another person (whether of the same or opposite sex) who:

> you are ‘in a relationship with’ that is registered under a prescribed state or territory law (Note 1)

>although not legally married to you, lives with you on a genuine domestic basis in a relationship as a couple

(Note 1) You are not ‘in a relationship’ if you live separately and apart on a permanent basis, even if you are legally married. 

Refer to the link below for the amended definition of spouse and child from 1 July 2008 which includes same sex relationships.

Before 1 July 2008

A ‘spouse’ included another person who, although not legally married to you, lived with you on a bona fide domestic basis as your husband or wife, but did not include:

> a person who lived separately and apart from you on a permanent basis.

> same sex relationships 

Post 1 July 2007 – Death Benefits paid as a lump sum from superannuation

*Included in Taxable Income for Medicare Levy purposes, unless paid via a deceased estate.

Pre 1 July 2007 – Death Benefits paid as a lump sum

*Included in Taxable Income for Medicare Levy purposes.