Lyn Formica, head of education and content for Heffron, said the SuperStream data should also reflect that it is a death benefit.
“Where we have a death benefit pension, we commute it and roll over the proceeds to another superannuation fund,” Formica said.
“If we’re winding up an SMSF, and we have a death benefit pension, we know we can’t roll over the pension intact; we have to commute it and then roll over the proceeds. Alternatively, if we have a death benefit that hasn’t been cashed yet, we roll it over to another superannuation fund for immediate cashing.”
She added that whether it’s a death benefit or a normal rollover, the same rules apply in terms of SuperStream.
“All rollovers, including death benefit rollovers, have to use SuperStream unless it’s an in-specie payment,” she said.
“We use SuperStream to send the rollover data through to the new fund, and that data should indicate that we’ve got a death benefit rollover. We’ll also have a rollover benefit statement. That’s going to look different to the standard rollover benefit statement. It’s got some extra information on it to indicate that it’s a death benefit rollover, so it’s important to make sure you are using the correct rollover benefit statement.”
Formica continued that the benefit statement may not need to go to the superannuation fund unless it was an in-specie rollover, or there is a child recipient, but it’s necessary to give that rollover benefit statement to the receiving member involved.
“What do we do, though, when the SuperStream data or the rollover benefit statement doesn’t indicate it’s a death benefit?” she asked.
“We’ve had a number of situations recently where the data makes no mention of it being a death benefit, but we know that it is. If we’re the paying fund, if we’ve made a mistake, we’re the administrator of the paying fund and have sent data across to the new fund without indicating that it’s a death benefit, we need to contact that receiving fund and let them know a mistake has been made.”
However, she said that sometimes, the mistake may not be noticed until it is too late for it to be rectified in the SuperStream system.
“A couple of years ago, a particular person had rolled over a death benefit. It didn’t indicate it was a death benefit. Ultimately, it meant the money got mixed with the client’s normal superannuation benefits,” she said.
“As the SMSF was wound up, and rolled over, the death benefit rolled over the normal super at the same time, and the receiving fund didn’t know there was a rollover involved, so it combined all the benefits together. Three or four years down the track, that cannot be undone.
“All we can really do is if your client doesn’t want the pension anymore, advise them not to roll it back to accumulation phase. They cash it out. You can’t roll death benefits back to accumulation phase.”
