Did you know that if your super is in the CSS or PSS, and you are a sole parent, entering a new relationship could put at risk the death benefits payable to your child if you do nothing?
This is how it works:
- If you pass away while you’re still contributing to these schemes, the death benefits payable will be a percentage of the pension that would have been payable if you retired on the grounds of invalidity. You will normally find an estimate of this pension on your annual statement, or you can complete projections using the i-Estimator tool found on the CSS and PSS scheme websites.
- If you don’t have a spouse, your children receive orphan’s pensions. One child receives a 45% pension, two children receive 40% each (ie, 80% total), three children 30% each, and if you have 4 or more children they divide 100% of the pension amongst those children. The pension is payable until they reach age 16, or up to 25 if they meet certain conditions such as being financially dependant and studying full-time. This is the income that can assist a family member or friend with raising your children, should anything happen to you.
- If you do have a spouse, they receive a 67% pension, with an 11% pension payable for each child up to a maximum of 3.
So if you have entered a new relationship, and they meet the definition of a spouse for the purpose of the CSS or PSS scheme rules, the pension available for your children will be reduced substantially. Whether or not your partner is considered an eligible spouse depends on a number of factors, which can include:
- the level of financial and/or emotional dependency
- any registration of the relationship under State or Territory laws
- if there is another child born to the relationship
- joint ownership of a home
- other matters that the Commonwealth Superannuation Corporation (the scheme administrators) consider relevant
There are plenty of options available to provide for your children if you are worried about the above scenario applying to you. You can contact the office on (02) 6247 1233 or email email@example.com for an obligation free appointment, putting your mind at ease.
We can also help with referrals to good estate and family lawyers to make sure that your benefits are available to look after your children.
(image credit: By Pam (Flickr: Triplet lambs) [CC-BY-2.0 (http://creativecommons.org/licenses/by/2.0)%5D, via Wikimedia Commons)