by Abra Chowdhury
A reversionary pension is a superannuation income stream that will, on the death of the pension owner, automatically continue to a nominated beneficiary. The beneficiary must meet the SIS definition of dependent both at the time of nomination and when the pension reverts.
A valid reversionary pensioner nomination will generally take precedence over all other death benefit instructions, making it a simple and powerful estate planning tool.
Nominations are usually done at pension commencement, but can be added at a later date. Be sure you understand any Centrelink implications before making changes.
Reversionary pensions are also treated more leniently for the $1.6 million transfer balance cap, with the value not counting towards the recipient’s cap until 12 months after death of the primary pensioner, compared to non-reversionary pensions which count immediately.
A key estate planning consideration is that death benefit income streams can never be commuted back to the accumulation phase – they can only be taken as a lump sum or rolled over to another death benefit income stream.
As always check the trust deed of your SMSFs to ensure there are no overriding provisions.
The Trust Deed of a Self Managed Superannuation Fund governs the operation of the Fund. While Superannuation Legislation changes from […]
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