17 September 2015
Update to the Zurich Superannuation Plan / Zurich Account-Based Pension Additional information guide: death benefits
The following text is added at the end of the booklet:
From 1 July 2016 there will be a change in the way death benefits are paid. From that date, the arrangements described elsewhere in this booklet will no longer apply and the following will apply instead:
What happens on death?
Binding Death Benefit Nomination (ZSP and ZSBP)
If you die with a valid Binding Death Benefit Nomination, the Trustee must pay your death benefit to your nominated beneficiaries in the proportions specified in the nomination.
For a nomination to be valid:
- The proportion of your death benefit to be paid to each beneficiary must be clearly set out (and total 100 per cent)
- The nomination must be signed and dated by you in the presence of two witnesses, both of whom are over 18 years of age and are not nominated to receive a benefit
- The nomination must have been made, or confirmed within 3 years of the your death and
- You must not have revoked your nomination.
Each nominated beneficiary must be your Dependant (refer below), or your Legal Personal Representative (generally the executor of your will or the administrator of your estate).
Generally, you may choose for benefits to be paid as a lump sum or as a pension. However, it must be paid as a lump sum if the benefits are payable to your Legal Personal Representative or to a child aged over 18, unless the child is:
- Under 25 and financially dependent on you immediately prior to your death, or
- Permanently disabled.
Definition of Dependant
A Dependant includes:
- Your current spouse (including de facto spouse) of either gender,
- Your children of any age (including adopted children, stepchildren and your spouse’s children),
- Someone who is financially dependent on you, or
- Someone with whom you have an ‘interdependency relationship’
Two people have an ‘interdependency relationship’ if:
- They have a close personal relationship;
- They live together; and
- One or each of them provides the other with financial support; and
- One or each of them provides the other with:
- Domestic support and personal care, but not if one of them provides domestic support and personal care to the other under an employment contract or a contract for services or on behalf of another person or organisation such as a government agency, a body corporate or a benevolent or charitable organisation; or
- Support or care of a type and quality normally provided in a close personal relationship, rather than by a mere friend or flatmate
- Two people also have an interdependency relationship if they have a close personal relationship but they do not meet the other requirements of interdependency because:
- Due to either or both of them suffering from a disability including a physical, intellectual or psychiatric disability, or
- They are temporarily living apart.
A Dependant must be alive and meet the definition of Dependant immediately before your death.
What if a nominated beneficiary is not your Dependant or your Legal Personal Representative?
In such cases, the portion of the benefit to be paid to that nominated beneficiary will be paid as if there is no valid Binding Death Benefit Nomination.
Where there is no valid Binding Death Benefit Nomination, the Trustee must pay the death benefit (or applicable proportion) in accordance with the trust deed. This generally means that the benefit will be paid to your Legal Personal Representative, unless the Trustee:
- Is unable to identify your Legal Personal Representative within 6 months of the Trustee being notified of your death; or
- Has reason to believe your estate is insolvent
If either of the above apply, benefits are instead paid to spouses or, if none, children in equal shares (where there are more than one). For example, if you have no spouse and two children, both children would receive 50 per cent.
Note that a person is only a 'spouse' or a 'child' if the Trustee is aware of the person's existence and is satisfied of their status as such.
If there is no spouse or child, then the Trustee must pay the death benefit to your Legal Personal Representative (even if the estate is insolvent) or deal with the death benefit under applicable laws relating to unclaimed super.
Making a Binding Death Benefit nomination
For further information on binding nominations, including the nomination form, please ask your financial adviser to provide you with a copy of the Zurich Super Estate Management Binding Nomination brochure. Alternatively a copy of the brochure can also be obtained by contacting the Zurich Client Service Centre on 131 551 or through our website at www.zurich.com.au. There may be taxation or other implications to consider. You should consult your financial adviser for information regarding the nomination of a beneficiary.
You must confirm your nomination every 3 years in order for it to remain valid. You can do this by giving us a written notice, signed and dated by you, to that effect before it expires, or simply complete the confirmation form we send to you. It is your responsibility to ensure your Binding Death Benefit Nomination is confirmed before it expires.
If you wish to amend your nomination, you need to complete and submit a new binding nomination form which will then completely replace all previous nominations.
Reversionary pensioner nomination (ZABP only)
Instead of a Binding Death Benefit Nomination, under the ZABP, you can alternatively elect a reversionary pensioner. Your reversionary pensioner must be a Dependant who is eligible to receive a pension (as explained above).
If you elect a reversionary pensioner, in the event of your death, the regular payments will continue to be made to the Dependant you nominate as a reversionary pensioner on the application form. Only one reversionary pensioner can be nominated, who must be nominated when your pension is commenced.
If your reversionary pensioner dies before you, or your reversionary pensioner is not a Dependant (or in the case of a spouse, no longer your spouse) at the time of your death, your nomination will become invalid and the money will be paid as if there is no nomination in place (as explained above).
If payments to the reversionary pensioner have commenced, and the reversionary pensioner subsequently dies whilst still entitled to a pension, the balance of the benefit will be paid as if the reversionary pensioner is you and there is no nomination in place (refer above).
A reversionary pensioner nomination is binding on the Trustee and is irrevocable. This means that you cannot change your decision once you have nominated a reversionary pensioner. The only way to change your nomination is to commute your pension (provided you did not elect to make it non-commutable when setting it up) and then set up a new one.
Making a reversionary pensioner nomination may have taxation and other implications. We recommend you discuss the appropriateness of such a nomination with your financial adviser.