Superannuation is a useful vehicle for people to save money for their retirement. But, for people with Multiple Sclerosis (MS), superannuation usually provides other significant insurance benefits which will provide a degree of financial support if you have to stop work due to your MS.
Generally speaking, the insurance provided in superannuation is Income Protection, Total and Permanent Disability (TPD) and Life/death insurance. Since 2013 almost all employment superannuation funds provide default TPD insurance however the rules which apply to each different super fund can vary greatly.
So, what is the difference between TPD insurance and Income Protection insurance:
- TPD Insurance is generally a Lump Sum benefit payable if you’re no longer able to return to the work that you’re reasonably trained or qualified for;
- Income Protection insurance is a monthly benefit which is paid to you if you can’t do your job at the moment, and some policies may also provide a partial benefit which will “top-up” your income if you need to reduce your work hours. Income Protection may be payable for 2 years, 5 years or sometimes until age 65.
If you successfully claim a TPD or Income Protection benefit, it may have tax and centrelink implications.
Changing Super Funds
Recently we have seen some significant investment volatility. As a consequence of the downturn in investments some people have made a decision to move their superannuation to a new super fund. However, people should be very careful before making such a decision. Changing super fund can have a very significant impact on any insurance benefits which you might have. Before making any decisions about changing superannuation you should ensure that you understand what your insurance entitlements are.
Reducing your working hours
It is common that people with MS will continue working after a diagnosis, but sometimes people will reduce their working hours. There are some super funds where a reduction in your working hours can have a material impact on your TPD or income protection benefits. So, if you’re considering reducing your work hours or stopping work altogether it is important that you understand your situation before making any decisions.
Berrill & Watson Lawyers provide a free service to assist people with MS in understanding what their rights and entitlements in their superannuation fund(s) are. If you wish to understand your situation, please contact us so that you can understand your rights before making any work decisions.
Written by Paul Watson, Director of Berrill & Watson Lawyers
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