Betty, 58, and retired, came to our office following the passing of her Husband, John. John’s superannuation was via an Industry superannuation fund with a balance of $372,000. The Industry Super Fund had sent Betty a number of forms to finalise her late husband’s super account. One of the forms received was regarding the commencement of a reversionary pension. This would provide Betty regular income via the superannuation account to assist with her living expenses of $1,000 per fortnight. Betty is currently receiving Bereavement Allowance of $716 per fortnight (soon to end) and has adequate savings to supplement the remaining $284 each fortnight.
Whilst completing the Reversionary beneficiary form would provide Betty her required income she has not considered alternative options available to her.
With the lack of professional advice Betty was unaware of how different her situation could be. One thing Betty did not think of was the impact on her Centrelink entitlements if she were to commence a reversionary pension. Instead of Betty commencing a reversionary pension we recommended Betty withdraw 100% of the Industry Super Fund. As a result the Anti-detriment payment of approximately $38,000 (a refund of contributions tax her husband had previously paid) is received. Betty would have lost this if she commenced the reversionary pension. Once the total proceeds have been received we recommend this be contributed to a superannuation account in her name. Not all funds would need to be added to super however this does provide the best result in Betty’s case. The benefit of superannuation enables the funds to be exempt from Centrelink, thus not impacting any entitlements. If Betty required lump sum access, these funds would be available whilst not working.
As a result of our recommendations Betty is eligible to receive the full rate of Widow Allowance of $469 pf. Her remaining cash flow requirements are met from funds in savings and lump sum superannuation withdrawals. …
Value of our advice:
As a result of Betty seeking our professional advice, she received the Anti Detriment payment of $38,000. On top of this she will receive ongoing Widow Allowance of $469 per fortnight which could be payable until Age Pension age (65). The Centrelink entitlement benefit provides approx $85,000 over the next 7 years for Betty. In total the value of our advice gave Betty a benefit of $123,000!
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