Death benefits

Prescribed period doubt present

death benefit prescribed period

There remains uncertainty among advisers as to whether a prescribed period must be observed when considering the treatment of super death benefits.

A recent poll conducted among financial advisers has revealed some uncertainty still exists as to whether a prescribed period relating to superannuation death benefit payments has to be observed.

The survey was undertaken during the BT Academy webinar held today and showed 55.4 per cent of attendees thought the death benefit prescribed period was a compliance element individuals still had to observe, while a further 9.6 per cent of practitioners thought it was no longer in play.

“Do we need to consider the prescribed period? No we don’t. The prescribed period doesn’t exist in legislation anymore,” BT Financial Group advice strategy and technical specialist Tim Howard said.

“The prescribed period was a period of time within which a death benefit beneficiary who started a death benefit pension wasn’t actually able to roll that pension [over] to another provider. The prescribed period used to be the latter of six months from the date of death or three months from the grant of probate of the estate of the deceased and a spouse had to wait until after that period before they could roll a death benefit pension [over] to another provider.

“[Under the rules] it was only a spouse who could do that.”

Reinforcing the existing lack of clarity regarding the prescribed period rule, Howard acknowledged it is a question that is still occasionally asked of the BT technical team.

The scrapping of the requirement on 1 July 2017 has resulted in greater flexibility as to the way in which superannuation death benefits can be treated, he noted.

“[Since that date] anyone receiving a death benefit pension can roll that pension to another provider,” he said.

According to Howard, it means a member of a super fund that doesn’t offer a death benefit pension option can now more easily look to become a member of a different super fund that does offer a death benefit pension option, including an SMSF, and establish their death benefit pension from the new fund.

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