Death benefits
On your death, the superannuation death benefit payable is determined by your super arrangement and may include an insured amount, if applicable.
Superannuation death benefits do not form part of an estate and are dealt with separately to the assets that make up your estate.
Who receives the superannuation death benefit?
The trustee of your super fund generally has discretion in deciding who receives your superannuation death benefit. At Telstra Super, you have the option of nominating a preferred beneficiary, and the Trustee takes this nomination into account before it makes its decision.
To have your wishes taken into account, make a valid nomination and keep it up-to-date. Disputes and other problems can arise when members do not name a beneficiary, when they name someone who is not a dependant, or when the nomination is out of date. (In the event of competing claims, the Trustee can decide to split the benefit among a number of eligible people.)
About beneficiaries
Unlike the rest of your estate (assets like your house and investments), you cannot leave your super to your favourite charity - you can only nominate a dependant or legal personal representative as your beneficiary(ies).
While you may think the identities of your dependants are obvious, in this age of divorce, second and third marriages, extended families and same-sex couples, identifying dependants can become a difficult and time consuming task for the Trustee in the absence of a nomination.
Payment of death benefits
Lump sum payments
Death benefits will be tax-free if paid to a tax dependant. The beneficiary must be considered a dependant at the time of death in order to qualify for the dependant tax treatment.
If the lump-sum is paid to a non-tax dependant, the taxable component of the benefit will be taxed at 15% (plus Medicare levy). If the death benefit contains an insurance component with an untaxed element, the untaxed amount will be taxed an additional 15%.
Income stream payments
The Trustee has the discretion to pay superannuation death benefits as an income stream to your current spouse or eligible dependants. Dependant children under age 25 - can receive superannuation death benefits as an income stream until they reach age 25. Any balance when the child reaches age 25 will be paid as a lump sum, tax-free, unless the child is permanently disabled, in which case, the income stream can continue. (Please note – currently Telstra Super does not pay income streams to children under 18 years.)
Tax on the income payments varies according to the age of the dependant and the age the deceased died.
Taxation of death benefits paid as income streams:
| Age of deceased | Age of recipient | Taxation |
|---|
| Age 60 and above |
Any age |
Taxable component - element taxed in fund is paid tax-free
- element untaxed in fund is subject to marginal tax rates with a 10% tax offset applied.
|
| Below age 60 |
Above age 60 |
Taxable component - element taxed in fund is paid tax-free
- element untaxed in fund is subject to marginal tax rates with a 10% tax offset applied.
|
| |
Below age 60 |
Taxable component - element taxed in fund is subject to marginal tax rates with a 15% tax offset applied
- element untaxed in fund is subject to marginal tax rates.
|
Nominate a beneficiary
You can nominate a beneficiary in the following ways:
Download a Nomination of Beneficiaries form (54kb)
Log in to SuperOnline and nominate your beneficiaries online