The Finer Points of Reversionary Pensions

25 Oct 2022

Written by

David Busoli, Principal

When a primary pensioner dies, the pension continues to a reversionary beneficiary. Though that’s obvious it’s useful to consider the finer points of this scenario.

  • The primary pensioner’s minimum pension draw must still be met in the year of death.
  • Any grandfathered Commonwealth Seniors Health Card income treatment relating to a pre1 January 2015 pension, will be retained by the reversionary beneficiary.
  • Though a TBAR must be lodged as at the date of death the reversionary beneficiary’s transfer balance account won’t be affected until a year later. This provides ample time to determine what TBA strategies are appropriate for the reversionary pensioner.
  • What is often overlooked is that, unlike the 1-year grace period for transfer balance account purposes, the reversionary pension balance will be included in the reversionary beneficiary’s total super balance at the next 30 June – not a year later. This could preclude the reversionary beneficiary from making further non concessional contributions in the next financial year so consideration should be given to the advisability of making NCCs for the reversionary beneficiary before the end of the year of death of the primary pensioner.

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