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Karl has been diagnosed with a life-threatening illness, and told he is likely to die within a year. When he informs HR of the sad news, they immediately refer him to UniSuper Advice.
- Age 66
- Still working
- Salary of $99,000 p.a.2
- DBD (Division A) member of 27 years
- Diagnosed with terminal illness
- Has a 55 year-old wife in excellent health
- Has two children in their teens who plan to undertake university degrees
At the initial meeting, Karl and the adviser discuss his options. Because Karl joined UniSuper as a Defined Benefit Division member before 1990, he is entitled to either a Division A or Division B retirement benefit. (Because he’s over 65, his inbuilt Death benefits under both divisions are irrelevant.)
Karl tells the adviser he wants to feel confident that his affairs are arranged to provide the best possible benefit for his family. He is planning to take the maximum lump-sum payment he is entitled to, which is through the Division B membership category. This large lump sum would pay off his remaining mortgage and leave his wife Eva with a sum of money to live off.
The adviser listens to Karl’s objectives and concerns and explains that he will model his retirement benefit under both Division A and Division B. When they next meet, the adviser explains to Karl that the lower Division A lump sum – supplemented by surviving spouse and dependent children pensions – may be a better overall option for his family. When Karl sees the numbers he agrees and authorises the adviser to work with other parts of UniSuper to take care of all the paperwork required both now and after his death.
||Estimated total value
Division A benefit
The adviser recommended Karl take a Division A benefit and opt for a combination of lump sum and reversionary pension benefits.
(This is the ‘present capital value’ of the pensions that would be payable to Eva and the children after Karl’s death.)
Division B benefit
Karl wanted to take this benefit originally. The lump sum is higher than the Division A equivalent, but does not include surviving spouse and dependent child pensions.
Karl is very glad he talked over his plans with a financial adviser who understood his relatively complex entitlements. Knowing that his family will be well provided for has given him some much-needed peace of mind in his last few months. He’s also relieved he doesn’t have to manage all the paperwork himself. UniSuper will take care of most it, so Karl and Eva can make the most of their remaining time together.
1. Karl is a hypothetical member, but the relevant facts are based on a member. 2. All figures provided, including this figure, are based on the specific factual circumstances detailed in this scenario, are not guaranteed, and may be rounded. 3. These estimates assume that Eva receives the surviving spouse pension for a period of 31 years (her statistical life expectancy), the children both receive dependent child pensions to age 23 due to planned university study, the pension payments rise with inflation amounting to 2.75% and the discount rate amounts to 4.5% gross of tax. For child pensions where the child is over school age and not disabled, they are required to pursue a regular course of school, college or university on a full-time basis, with such course approved by the Trustee.
The information contained in this case study is not legal, taxation or accounting advice. It is intended to provide general advice only. It has been prepared without taking into account your objectives, financial situation or personal needs. Prior to making any investment decisions, you should speak with a financial adviser to consider whether this information is appropriate for your needs, objectives and circumstances. You should also obtain a copy of the relevant product disclosure statement (PDS) prior to making a decision regarding any investment in any financial product. Whilst care has been taken in the preparation of this information, the accuracy or completeness of the information is not guaranteed. This case study was prepared and issued by UniSuper Management Pty Ltd ABN 91 006 961 799, AFSL No: 235907, which is also the administrator of, and wholly owned by, the UniSuper Superannuation fund (ABN 91 385 943 850). UniSuper Limited (ABN 54 006 027 121) is the trustee of the fund.