If you have recently lost your partner, we are sorry. What follows is practical information, written for people who need to understand what happens next without wading through jargon to find it.
Two things are worth saying at the outset. Very little needs to be decided immediately, and almost nothing needs to be decided well. There is one time-sensitive step, covered first below. Everything after that can wait until you have the capacity for it.
The one thing to do soon
Tell Services Australia that your partner has died. This matters for two reasons, and neither is about paperwork for its own sake.
If payments continue to be made to your partner after their death, they generally have to be repaid, and discovering that months later is distressing and avoidable. Prompt notification also affects when your own payment is adjusted to the single rate, and being outside the notification window can change the date that adjustment takes effect.
You can call Services Australia on 132 300, the Older Australians line, or notify through myGov. If you have your partner’s Customer Reference Number, it helps. If you do not, call anyway.
Ask specifically about the bereavement payment while you are on the phone. It is not always volunteered.
The bereavement payment
Where both members of a couple were receiving a pension or income support, the surviving partner may receive a lump sum bereavement payment to smooth the transition to a single income.
Broadly, it is calculated over a 14-week period beginning on the day your partner died, and represents the difference between what you would have received as a couple and what you now receive as a single person. If some payments were made to your partner after their death, those generally reduce the lump sum rather than being separately recoverable.
Eligibility usually requires that both of you were receiving a pension or income support payment, in many cases for at least the previous twelve months. Claim timeframes apply, so confirm them with Services Australia rather than assuming, and do it earlier than feels comfortable.
If you were not receiving a payment yourself and your partner’s death has left you without income, you may be eligible to claim a payment in your own right. That is a separate conversation with Services Australia and worth having promptly.
One that many people miss
If your partner had registered for the Pension Bonus Scheme and died before successfully claiming their Age Pension and bonus, you may be entitled to a Pension Bonus Bereavement Payment. It is separate from the ordinary bereavement payment, and you do not need to be receiving an income support payment yourself to be eligible. Very few people know it exists. If your partner ever mentioned a pension bonus, ask about it.
Why your household income falls more than you expect
This is the part that catches people, and it is worth understanding before it happens rather than afterwards.
Your individual fortnightly payment will go up. The single rate of Age Pension is higher than half the couple rate, so as an individual you receive more than you were receiving before.
Your household income nonetheless falls substantially, because the single rate is well below the combined couple rate. Two people on the full pension receive considerably more between them than one person on the full single rate.
Meanwhile, most of the household’s costs do not halve. Rates, insurance, maintenance, electricity connection charges and the cost of running a car change far less than the income does. That gap between a large income reduction and a small expense reduction is the practical squeeze, and it is worth mapping out before making any decisions about the house or your investments.
The threshold trap
Here is the mechanism that surprises people most, and the one where advice makes the biggest difference.
The Age Pension is assessed against income and assets tests, and the thresholds for a single person are considerably lower than those for a couple. At the same time, a surviving partner often inherits their partner’s share of the couple’s assets.
So you can find yourself holding a similar level of assets while being assessed against markedly tighter thresholds. The result is that some people see their pension reduce sharply, or stop altogether, at exactly the point their household income has already fallen. Nothing was done wrong. The rules simply changed category.
Two practical points follow. First, how assets are recorded as being owned matters, because Centrelink assesses the income and assets held in the surviving partner’s name. Second, if you are anywhere near a threshold, this is worth modelling properly rather than discovering through a letter.
Deeming rates on financial assets also apply differently to singles than to couples, which affects the income test independently of the assets test.
What happens to your partner’s super
Superannuation does not automatically form part of your partner’s estate and is not necessarily governed by their will. What happens depends on the type of income stream and on the nominations that were in place.
If the pension was reversionary
A reversionary pension is one where a beneficiary, usually a spouse, was nominated when the income stream began. On death, the pension simply continues, paid to you, with the same underlying investments. Nothing needs to be cashed out, restarted or reapplied for.
There is a further advantage that is easy to overlook. The value of a reversionary pension is not counted against your own transfer balance cap until twelve months after the date of death. That grace period exists to give you time to restructure if the combined amount would otherwise exceed your cap, and it is a genuinely useful window. It also passes quickly.
Our article on reversionary pensions covers how they work in more detail.
If the pension was not reversionary
Where no reversionary beneficiary was nominated, the balance becomes a death benefit that must be paid out as soon as practicable. It can be paid as a lump sum, or as a new death benefit income stream in your name, but it cannot simply be left in the fund indefinitely, and it cannot be rolled into your own accumulation account.
Who receives it depends on whether a binding death benefit nomination was in place and whether it was still valid. Some nominations lapse after three years. Where there is no valid binding nomination, the trustee decides, guided by the fund’s rules, and that process takes time.
Who is allowed to receive it
Super death benefits can only be paid to dependants as defined by superannuation law, or to the estate. A spouse qualifies, as do children, financial dependants and people in an interdependency relationship.
The tax rules use a narrower definition, and this is where families get caught. A spouse is a tax dependant, so a death benefit paid to you is generally tax free where your partner was 60 or over. Adult children, however, are usually not tax dependants, so a lump sum paid to them can have tax applied to the taxable component. That is a planning issue for your own arrangements rather than something to address now, but it is worth knowing about when you next review your nominations.
Your transfer balance cap
If you are already drawing your own retirement income stream and you receive your partner’s as well, the combined amount is measured against your personal transfer balance cap. Where it exceeds the cap, some of it has to be commuted back to accumulation phase or withdrawn.
This is one of the more technical areas of the system and one where errors are costly, particularly where a reversionary pension’s twelve-month grace period is running quietly in the background. If your combined balances are substantial, get advice inside that window rather than at the end of it.
Other things that change
Your Commonwealth Seniors Health Card, if you hold one, is assessed against a single income threshold rather than a couple threshold.
If you receive Rent Assistance, it is reassessed after the bereavement period.
If either of you was receiving Carer Payment or Carer Allowance, separate continuation arrangements apply, generally for up to 14 weeks.
Aged care means testing, if it becomes relevant later, is also assessed on a single basis, and the family home is treated differently once there is no partner remaining in it. That is not an immediate concern for most people, but it is a reason not to make hasty decisions about the house.
What can safely wait
Beyond notifying Services Australia and dealing with anything with a legal deadline, most decisions can and should wait.
Do not sell the house in the first year. Do not restructure your investments while you are grieving. Do not make large gifts to children, however much you want to, until you understand your own income position, because gifts above the allowable limits are still assessed for five years and can reduce your pension.
Be cautious about anyone who approaches you with an investment opportunity during this period. Recently bereaved people are targeted, and the pressure to decide quickly is itself the warning sign.
The exception to all of this is the twelve-month reversionary pension window, which has a hard edge. If your partner’s pension was reversionary and your combined balances are large, that one is worth attending to earlier.
If you are reading this in advance
Some people find this page while planning rather than after a death, which is the better time to be here.
Three things make an enormous difference to a surviving partner. Check whether your income streams are reversionary, and understand what happens if they are not. Check that binding death benefit nominations are current and have not lapsed. And model what the household finances actually look like on a single Age Pension against single thresholds, because the shape of that is very different from a couple’s position and is covered in our article on couples versus singles in retirement.
Doing that work while you are both well is a considerable kindness to whichever of you is left.
Where to get help
For grief support, Griefline offers a free national helpline on 1300 845 745, and Lifeline is available on 13 11 14 at any hour.
For the financial side, Services Australia’s Financial Information Service is free, independent and can talk through your pension position. We can also help if you would like someone to work through your income, your super arrangements and your entitlements with you, and coordinate with your accountant or solicitor where an estate is involved. Our retirement advice page has more, and there is no urgency to it.
Frequently asked questions
Does my Age Pension increase or decrease when my partner dies?
Your individual payment increases, because the single rate is higher than half the couple rate. Your household income decreases, because the single rate is well below the combined couple rate. You may also be assessed against lower single-person income and assets thresholds while holding similar assets, which can reduce your entitlement further.
What is the Centrelink bereavement payment?
It is a lump sum to help a surviving partner transition to a single income. It is generally calculated over a 14-week period starting on the day your partner died, and represents the difference between the combined couple rate and your new single rate. Eligibility usually requires that both partners were receiving a pension or income support payment. Claim timeframes apply, so confirm them with Services Australia.
How quickly do I need to tell Centrelink my partner has died?
As soon as you reasonably can. Payments made after the date of death generally have to be repaid, and the timing of notification can affect when your payment is adjusted to the single rate. Call Services Australia on 132 300 or notify through myGov.
What happens to my partner’s super pension when they die?
If the pension was reversionary, it continues automatically to the nominated beneficiary, usually the spouse, with no need to restart it. If it was not reversionary, the balance becomes a death benefit that must be paid out as soon as practicable, either as a lump sum or as a new death benefit income stream, and it cannot be rolled into your own accumulation account.
Is my partner’s super taxed when I receive it?
A spouse is a dependant for tax purposes, so a death benefit paid to you is generally tax free where your partner was 60 or over at the time of death. Adult children are usually not tax dependants, so lump sums paid to them can have tax applied to the taxable component.
How does my partner’s pension affect my transfer balance cap?
The value counts against your own personal transfer balance cap. Where a reversionary pension is involved, it is not counted until twelve months after the date of death, which gives you time to restructure if the combined amount would exceed your cap. If it does exceed the cap, some of it must be commuted or withdrawn.
Should I make any big financial decisions after my partner dies?
Generally not in the first year. Selling the family home, restructuring investments or making large gifts are all better made once your income position is settled and you have capacity to weigh them. Gifts above the allowable limits continue to be assessed for five years and can reduce your pension. The main exception is the twelve-month reversionary pension window, which has a fixed deadline.
General advice warning. This article contains general information only and does not take into account your objectives, financial situation or needs. Age Pension rates and thresholds change twice yearly, and entitlements depend on your individual circumstances. Superannuation death benefit rules are complex and depend on your fund’s governing rules and the nominations in place. Nothing here is tax or legal advice. Please confirm your position with Services Australia and seek personal financial advice before acting on any of it.
