As we close out the SMSF conference in Melbourne, we’re focusing on an important aspect of superannuation planning—Excess Transfer Balances and what happens when a client passes away, whether they are retired or still working.
Under the 2017 superannuation reforms, the amount that can remain in the superannuation environment or be paid as a death benefit pension is restricted by the Transfer Balance Cap (TBC)—currently $1.9 million. Advisers need to ensure their clients' super strategies align with these rules to avoid unintended consequences for their clients.
🔹 If your client passes away before retirement
Their super can be paid as a lump sum to a dependant or their estate.
A surviving spouse may receive a Death Benefit Pension up to their TBC, with any excess requiring withdrawal from the super system.
🔹 If your client passes away after retirement
Pension balances can be cashed out or transferred as a reversionary or non-reversionary pension.
If the spouse already has a pension, they may need to roll back some benefits to accumulation or withdraw excess amounts.
Planning ahead is key to ensuring superannuation benefits are maximised and structured efficiently for beneficiaries. As advisers, having these conversations with clients now can make a significant difference in securing their financial legacy.
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