Super choice for lump sums

Noel Whittaker
Noel Whittaker

THE major assets most Australians have when they retire are their house and their superannuation. Everybody likes to receive a big lump sum but one benefit that is almost unknown is the ability of some superannuation funds to refund a lump sum to the member’s estate on death, in compensation for the 15% contributions tax that was deducted from their contributions during their working life.

This is known as an anti-detriment payment and can be made only to a spouse or former spouse of the deceased, a child of any age, or to the estate provided the ultimate beneficiaries are the spouse, former spouse or a child. It can only be made when an accumulation death benefit is paid as a lump sum, or when a pension is commuted to a lump sum on the death of a pensioner (or reversionary pensioner) within the prescribed period. 

The calculation of the payment is a complex one, but in many cases the fund may use a simple formula. This is between 13.68% and 17.65% of the taxable component (excluding insurance) if the eligible service period commenced before 1 July 1988, and 17.65% for service that commenced after that date. 

Case Study: Jack’s eligible service period started in 1989 - when he died in 2010 his superannuation was paid to his widow as a lump sum. The taxable component was $600,000 so the estate was able to claim an anti-detriment payment of $105,900.

Unfortunately, space restrictions allow me to only touch the surface today, and the topic is such a complicated one that expert advice is essential if it is relevant for you. The main thing is to be aware of it, and also to take note that many funds do not offer it. Accordingly, being in the wrong fund could cost your estate tens of thousands of dollars.

Noel Whittaker is a director of Whittaker Macnaught Pty Ltd. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. His email is

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