ESSS Defined Benefit Fund members can take comfort in knowing that, providing you’ve contributed at the maximum level, ESSSuper will pay your dependants a benefit of up to 8.4* times your salary in the event of your death. This benefit is payable whether you’re on duty or not and you’re covered 24 hours a day, 7 days a week.
Understanding the benefit entitlement
A lump sum benefit will be payable once ESSSuper has been notified of your death and will be calculated in two parts:
- Accrued benefit to the date of death, plus
- Prospective benefit which would have been payable to:
a) age 55 for operational members assuming the contribution rate increased to the maximum 7% from the date of death, up to a maximum benefit multiple of 8.4 times the final average salary, or
b) age 60 for non-operational members assuming the contribution rate increased to maximum rate of 5% from the date of death, up to a maximum benefit multiple of 6 times the final average salary.
So, whilst it’s clear that your prospective benefit will be projected on the assumption you have paid the highest rate, your accrued benefit at the date of death will be based on actual contribution rates paid and your service history. It is important to understand that if you have contributed at less than your maximum at any stage, or your total years of service (including accrued and prospective) is less than 30 years, you may not be able to reach the maximum benefit multiple.
Need more cover?
If you have joined the fund later in life or haven’t been contributing and are less likely to reach the maximum benefit multiple, or simply want more cover, consider opening an ESSSuper Accumulation Plan account.
An ESSSuper Accumulation Plan account enables you to take out additional death, TPD and/or income protection insurance. Members can choose from either fixed sum or unit based cover. At the time of your death, a separate benefit in accordance with the level of cover you have chosen will be paid to your dependants in addition to your ESSS DB Fund benefit. Read our Accumulation Plan Insurance Guide for more information, or use our insurance calculator to work out how much you need.
For example, if you know that your debts exceed the benefit payable under your ESSS DB Fund benefit, you can take out additional insurance to cover these debt/s and more, to ensure your family don’t have to deal with a financial burden following your death.
Tax is generally not payable if the benefit is paid to a ’tax dependant’^, however, tax will deducted when paid to a non-dependant as follows:
- The taxable component – taxed element of your lump sum death benefit will be taxed at 15% plus Medicare levy.
- The taxable component – untaxed element of your lump sum death benefit will be taxed at 30% plus Medicare levy.
Your ESSS DB Fund benefit will be paid to your ‘dependant’º.If however, you have no dependants; your benefit may be paid to your nominees. Under the Fund’s governing rules a ‘dependant’ is defined as someone who is:
- your spouse or defacto spouse,
- a child who is less than 18 years of age, or between 18 and 25 and a full-time student,
- any person who, in the opinion of the Board was wholly or partially dependent on you for financial support at the date of your death, or had a legal right to look to you for financial support.
A ‘nominee’ is defined as any natural person as nominated by you, your natural or adoptive parents and/or your siblings.
You may wish to nominate a person or persons whom you wish to be considered as your dependant or nominee for payment of your death benefit. All decisions regarding death benefit payments are subject to legislation and Board discretion and will depend on your personal circumstances at the time of death. If you would like clarification on your choice of beneficiary, please contact the Member Contact Centre.
*The maximum death benefit payable for operational employees is 8.4 times final average salary, or 6 times final average salary for non-operational employees – if you have less than 30 years service or have not contributed at the maximum, you may not reach the maximum benefit multiple.
^Refer to the ATO for definition of ‘tax dependant’ and seek professional advice on taxation implications of investing in the ESSS Defined Benefit Fund.
ºFrom 1 December 2008, a dependant also includes a person who is in a registered relationship under the Relationships Act 2008.