Pension Bonus Bereavement Payment

Pension bonus bereavement payment

If pension bonus scheme (PBS) member dies before submitting a claim for pension bonus, their bereaved partner may be eligible to claim a pension bonus bereavement payment (PBBP), in lieu of the bonus payable to the deceased member. The PBBP applies to members who die on or after 1 January 2008.

Who is an eligible partner

A partner is not defined specifically for this purpose, but is taken to mean the partner of the PBS member as per section 5E(1) VEA immed — iately before the member died.

Calculating pension bonus bereavement payment

In working out the amount of PBBP, the deceased PBS member is taken to have made claims for both the designated pension and pension bonus just before they died. Disregard any PBBP employment income and any income of a kind specified in an instrument made under subsection 45UUB(2) VEA in working out the rate of the designated pension for the purpose of applying the pension bonus formula.

Conditions for bonus to be payable

If the rate of the designated pension immediately prior to the member's death is zero (after applying the modified test), then the bonus bereavement payment will also be zero. The minimum accrual of one year's bonus also applies. That is, the deceased PBS member must have accrued at least one full year bonus period of 365 days.

Employment income is disregarded

Certain kinds of income will not be assessed for pension bonus bereavement payment purposes. This reflects the fact that, under normal circumstances, most people cease work before claiming their p — ension bonus. This provision seeks to provide a similar outcome with no income from employment or leave payments affect — ing the rate of their designated pension and therefore the amount of their pension bonus.

PBBP employment income

PBBP employment income includes work-related income such as salary, wages, leave payments and business income of the deceased PBS member or the surviving partner. Periodic compensation payments for loss of earnings has also been declared as disregarded income. Income from work that does not meet the definition of gainful work, such as the management of family investments, is not disregarded from the means test in calculating PBBP.

PBBP income discount – limited application

The PBBP income discount only applies with respect to the bonus bereavement payment calculation. Any ongoing employment income will affect the rate of pension payable to the surviving partner, as well as the calculation of any bonus payable to the partner in their own right.