Reversionary pension law gives surviving spouses time to sort out their super.
Already a subscriber?Q: I have two account-based pensions with AustralianSuper – mine and that of my wife, who passed away in July of last year. I am withdrawing income from both accounts but come this July, I will have to make some decisions.
While this cap has increased periodically through indexation for some people – those who didn’t fully utilise their cap when they started their pension – in your case no increase will ever apply as you fully utilised your cap. To explain this, if the value of your wife’s pension was $1.95 million when she died, this amount will be assessed against your cap in July this year and unless you commute, or stop, an equivalent amount from your own and/or the reversionary pension you will exceed your cap.
Longer term, you may also wish to consider the impact of the proposed 15 per cent tax on a portion of superannuation earnings for people with total superannuation balances that exceed $3 million – known as Division 296 tax. Regarding superannuation earnings, these will also be calculated according to a formula. In its simplest form, if no contributions were made and no withdrawals taken from your super over a year, the earnings would simply be the change in the value of your total super over that year.
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