making a death benefit claim
On this page
- What is a death benefit?
- Who is eligible to receive a death benefit?
- The claims process
- How is a death benefit paid?
- Case studies
what is a death benefit?
A superannuation death benefit is a payment made after a HESTA member passes away. It includes their account balance, as well as any insurance cover they may have had at the time of their death.
Death benefits don't automatically form part of the deceased member's estate, even if they left a Will directing how their superannuation benefit should be paid or if they made a non-binding nomination on their account.
who is eligible to receive a death benefit?
There are strict legislative requirements and fund rules that guide how we decide who can receive a member's death benefit.
We can pay a death benefit to eligible dependants of the member or their legal personal representative (LPR), meaning the executor or administator of a member's estate.
Who is a dependant?
A dependant includes:
- a spouse (includes same-sex and de facto partners)
- a child including adult child, adopted child, step-child, ex-nuptial and child of the member’s spouse
- a person who is financially dependent on the member at the time of death
- a person in an interdependency relationship with the member at the time of death.
An interdependency relationship is when there is a close personal relationship between two people and:
- they live together and
- one or both provides the other with financial support, domestic support and personal care.
An interdependency relationship can also be a close personal relationship between two people, but one or more of the above conditions aren't met because of the physical, intellectual or psychiatric disability of one of the people.
If there aren't any dependants or LPR to pay the death benefit to, we'll consider paying it to another person or to the Australian Taxation Office (ATO).
For more information on who is a dependant or LPR, read the Claiming a superannuation death benefit guide and form (PDF).
Beneficiary nominations
There are 3 types of beneficiary nominations a member can make:
- Binding death benefit nomination - a valid binding death benefit nomination on the account at the time of the member's death means we must pay the death benefit to the people named in the proportions nominated by the member, as long as the nomination is valid (including that it has not expired and the persons listed qualify as dependants or LPR). If the binding nomination expires, the instructions revert to a ’non-binding’ nomination.
The nomination can only include dependants, interdependants or the anticipated LPR.
A binding death benefit nomination will generally be valid, if:
- it hasn't expired at the time of the member's death
- the people nominated were dependants or LPR of the member at the time of the member's death
- we received it before the member's death
- Non-binding nomination - if there's a non-binding beneficiary nomination, we'll consider the nomination together with all other personal circumstances to decide who to pay. We can use discretion on who should receive the benefit, but we need to follow superannuation law and the fund rules.
- Reversionary nomination – works similarly to a binding nomination. It ensures that your superannuation benefit is paid as a pension (income stream payment) to a nominated dependant after your death. Once made, a reversionary nomination cannot be changed.
Learn more about the types of beneficiary nominations.
*See our Vulnerable Members Policy (pdf) to learn about our commitments and expectations for dealing with members who are experiencing difficulty and require extra care.
the claims process
We understand that losing a loved one is a difficult and stressful time. While navigating a death benefit claim may seem overwhelming, we're here to support you through the claim.
These steps will guide you through the death benefit claims process and outline the documents and information you'll need. If you have any questions, please contact us for help.
First, you’ll need to complete a Claiming a superannuation death benefit guide and form (PDF). This will help us understand the deceased member’s personal circumstances, as well as who might be considered eligible to claim.
Start by reading the information about making a claim in the Claiming a superannuation death benefit guide and form (PDF) to understand who can claim a death benefit and look at the document checklist to find out what you’ll need to provide. The information we need from you is based on the relationship of the potential claimants to the deceased member.
Then, get the required documents together and fill out the form, including the Certifying your identification section.
We’re here to support you through the process of making a claim. If you have any questions, need help filling out the form or have trouble getting any of the required documents, you can contact us. Give us a call on 1800 813 327, Monday to Friday 9am - 5pm AET.
When you have everything ready, please scan and email or post to:
Email: hesta@hesta.com.au
Postal Address: HESTA, Locked Bag 35007 Collins St West, VIC 8007
We'll get in touch
When we receive completed claim form(s), we'll look at the information provided together with the late member’s account information, like beneficiary nominations and insurance entitlements. Your case manager will contact you to talk about what will happen next, or to ask for extra information. They'll let you know the expected timeframes of your claim and keep you updated on the claim status.
Account balance
When we receive formal notification of death, we’ll switch the member's account to the HESTA Cash and Term Deposits investment option so the account balance is less likely to be impacted by any investment market movements.
We'll identify all potential beneficiaries who may have a claim to the death benefit, including any nomination the member may have made.
If the member held insurance cover, we'll lodge a claim with our insurer to assess whether any insurance benefit is payable. Our insurer might ask for more information, which we'll contact you about. It's best to provide this as soon as possible to avoid any delays.
What happens if the insurer approves the insured benefit?
An approved insured benefit will be added to the member's account effective the date it's received from the insurer and will be invested in the Cash and Term Deposit investment option.
What happens if the insurer declines the claim?
If the insurer declines the claim, they'll write to us to let us know the reasons for their decision.
We'll review the proposed decision, and we may ask you to provide any extra information.
Any new information must be received by our insurer within 28 days for them to consider before reaching their decision. They'll let us know their decision and if we disagree, we'll ask for clarification or object to the decision.
If we agree with the insurer's final decision, we'll let all potential beneficiaries know in writing. We’ll let them know about other steps they can take if they disagree.
If a claimant isn't happy with the final decision, they can make a complaint to us. We'll always try to resolve complaints. But if we can't, the claimant can make a complaint to the Australian Financial Complaints Authority (AFCA).
We aim to assess and pay claims as quickly as possible upon receiving information and supporting documents. It can take less time if all the information is provided straight away, or it can take longer if there are delays. Delays can include things like appointing a Legal Personal Representative for the Estate, providing certified documents, conflicts of claimants, and locating multiple potential beneficiaries.
If we receive any new information, it generally takes 5 business days for the case manager to review. If no further information is needed, the claim will be referred to the HESTA Trustee to decide who will receive the benefit and in what proportion. We can only make a final decision once we confirm all possible and eligible beneficiaries.
Once a decision is made, we’ll notify all parties of the outcome in writing. In some cases we will give the parties 28 days to agree or object to the outcome and if no objections are received within 28 days, or if everyone agrees, the benefit will be paid to the beneficiary(s).
If an objection is made, we’ll review the claim and either confirm or change our decision. If a claimant is still unhappy, they can submit an objection to AFCA for an independent review. AFCA have strict timeframes of 28 days from the date of our decision to lodge an objection.
The benefit won't be paid while a complaint is in progress with AFCA. If this happens, your case manager will update you regularly on how the claim is progressing. You can also contact them any time for an update.
Where a 28-day period has been provided for objection, we will make the payment after the final 28-day period if we don't receive any objections.
Where no further objections are made to the decision, the benefit will be paid. Generally, we won't pay the death benefit unless all issues are resolved.
Once the Trustee has decided, the death benefit is paid as either:
- a lump sum: to an individual or split between multiple parties
- an income stream or rollover: some dependants can have a death benefit paid this way.
how is a death benefit paid?
Tax on death benefits
The amount of tax (if any) that is withheld from the benefit will depend on the individual to whom it is to be paid. It also depends on whether it's paid as a lump sum or an income stream or rollover.
Tax on lump-sum payments
The information provided in the claim documentation helps determine who is a financial dependant to assist in the decision and this leads to how they are taxed. Tax is payable only on the taxed component of the deceased member's balance.
| Paid to: | Is tax payable? |
Dependant of the deceased including:
|
No |
| Non-dependant (includes a child above the age of 18) |
Yes |
| Legal Personal Representative | Tax payable will depend on whether the beneficiary is a dependant or non-dependant. |
If the death benefit is paid as an income stream, the way it's taxed will vary. For example, the tax-free component remains untaxed, but if the age of the deceased member is below age 60, the taxable component will be subject to tax until the beneficiary reaches age 60; or in the event a child is nominated as a reversionary beneficiary, payments are only available until the child reaches age 25. Income stream payments may also impact the assessment of government payments or count towards the calculation of any transfer balance caps.
You can find out more about tax on super death benefits on the ATO website.
We recommend speaking with a financial adviser to understand the tax implications of receiving a death benefit.
We can't advise you on legal issues that may happen because of your claim. You may need to get legal advice, but you'll need to pay to have your own legal representation.
We need to act in the best interests of our members and their beneficiaries. All claims are assessed on a fair and reasonable basis. Your case manager will help you through each step in the claims process.
Patricia and Jean
Patricia and Jean are sisters who live together, share expenses, and have a close personal relationship. Patricia is a HESTA member.
Patricia is diagnosed with a chronic medical illness and Jean takes Patricia to medical appointments, provides support with everyday needs like cooking meals, personal hygiene, and emotional support, while she's unwell. Sadly, Patricia passes away.
After reviewing the evidence, the Trustee recognises that Jean and Patricia had an interdependency relationship, and with no other financial dependants identified, Jean may receive 100% of Patricia's death benefit tax free.
Susan and John
Susan is a HESTA member. She started a relationship with John and has been living with him for 12 months.
Susan has 3 adult children who are all financially independent. Susan passes away suddenly. After looking at the evidence, the Trustee decides to pay Susan's entire death benefit to John. They conclude that if Susan had lived, she would have continued to support John financially.
If Susan had made a valid Binding Death Benefit Nomination detailing how she wanted her death benefit to be distributed, such as including her adult children, this would have changed the Trustee's decision.