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Tax treatment of death benefits
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Who they can be paid to

Death benefits may be paid to a dependent of the member, a successor or nominee.

  • Dependant –
    • A widow(er)/civil partner at the time of death
    • Child of the member under age 23
    • A child who was dependent on the member due to mental or physical impairments
    • A person not married to the member but was finally dependent or dependent due to mental or physical impairments
  • Nominee –
    • Any individual, other than a dependent who has been nominated by the member.
    • If the member doesn’t make a nomination prior to their death then the scheme can make a nomination
  • Successor
    • An individual nominated by a dependent or nominee to continue to receive benefits.
    • If the nominee or successor doesn’t make a nomination prior to their death then the scheme can make a nomination

The format in which death benefits can be received is determined by how they are categorised.

The two year window – This is the timeframe which the death benefits must be designated to an income producing contract or paid out as a lump sum death benefit.