30/11/2017

We often get asked by clients, can a reversionary beneficiary be nominated after a pension has commenced? However, before nominating a reversionary beneficiary it is important to examine who can be nominated as a reversionary beneficiary.

In order for a trustee to be able to pay a pension to a person nominated as a reversionary beneficiary, that person must be a ‘pension dependant’. A ‘dependant’ is defined under section 10 of the Superannuation Industry (Supervision) Act 1993 (Cth) and must be a person who is in an ‘interdependency relationship’ with the member, or be the member’s spouse or child.

A person, will be treated as being in an ‘interdependency relationship’ even if the person is not related to the member, if it can be shown that the nominated beneficiary and the member had:

•    a close personal relationship;
•    that they lived together;
•    that the member or the nominated beneficiary provided the other person with financial support; and
•    that the member or the nominated beneficiary provided the other person with domestic support and personal care.

To be entitled to receive a pension on the death of a member, you must be classified as a ‘pension dependant’. Where a ‘dependant’ is a child of the deceased they must also satisfy the following:

•    be under 18 years of age; or
•    be 18 or more years of age and less than 25 years of age and be financially dependent on the member; or
•    have a disability of the kind described in subsection 8(1) of the Disability Services Act 1986.

At Townsends Lawyers our pension documents allow a member to appoint a reversionary beneficiary when the member commences the pension.

In circumstances where a member has already commenced their pension documents and is receiving a pension, but has not nominated a reversionary beneficiary, we can also assist with preparing the necessary documents for the member to nominate a reversionary beneficiary, which includes providing notice to the trustee of the member’s nominated dependant, and whether the dependant is to receive the member’s account balance when the member dies.

Appointing a person with an already large pension account balance as a reversionary pensioner may lead to problems with the transfer balance cap, but Townsends can also help with advice and guidance on this aspect of the member’s estate planning.

For further information on the types of pension documents available, or if you would like to discuss how to use a tailored pension as part of your clients' estate planning, please contact Townsends Business & Corporate Lawyers on (02) 8296 6222.