Noel Whittaker is the author of Wills, Death & Taxes Made Simple and numerous other books on personal finance. Email: [email protected]​

The superannuation industry is heading for a reckoning, and the latest uproar over death benefits is just one more chapter in a long-running saga.

In October 2024, ASIC Commissioner Simone Constant slammed the industry for poor service, weak trustee expertise, and a failure to reform. Her message was loud and clear – but, as usual, it fell on deaf ears.

If history is any guide, we know what happens next: apologies, vague promises, and token changes. Nothing near the overhaul that’s needed.

We all need to protect ourselves from the indifference of big institutions. Today, we’ll look at how.

So, when is the right time to draw out your super? Image Credit: Shutterstock

First, understand two key terms: member benefit and death benefit. A member benefit is a payment to a living member – it is tax-free. A death benefit is paid after death – and if it goes to a non-dependent, it may attract a death tax of up to 17%.

Obviously, it’s better to receive a member benefit: you get the money immediately and sidestep the death tax. So when is the right time to start pulling money out of super?
Let’s think about super. Throughout your working life, your fund grows steadily, boosted by contributions, employer payments, and investment earnings, all taxed at just 15%. When you retire and start a pension, the fund becomes tax-free, and you can withdraw as needed. Many retirees leave their money in super because it’s simple: investments are managed, and regular drawdowns can be arranged. But if the money is still there when they die, there can be drawbacks: delays, administrative hassles, and possibly a death tax.

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[Never eat yellow snow]

Thanks for this thread. I found it most helpful

 

[DLHM]

Good article. Given me something to think about.

 

[Luckyus]

I signed everything over to her indoors before my first cancer, so I have nothing Except for a part pension.

 

[Sherril54]

We don`t have any super left, what is the point of leaving it behind? I have seen this happen so many times it has lead to family disputes, vulturism and literally family relationships breaking down. Also, all that seems to happen is that by the time you go, the family or whoever are all settled with their own assests so it becomes play money.

 

[IAN3005]

I closed my super years ago..... it's a fraud.

 

[Ezzy]

I never had Super when l was working. Starting work in 1968 this was unheard of. When l was in my 40's this wasn't compulsory & l couldn't afford to pay a Home Loan & raise a family anyway.