Choosing a pension or a lump sum payment

With your State Super Scheme, you have only one opportunity to exchange, all or part of a pension entitlement to a lump sum payment. There is a set timeframe to apply to do this.

Choosing a regular pension payment or a one-off lump sum payment

When you retire and access your final State Super Scheme benefit, you generally have the option of:
 

• taking it as a regular fortnightly defined benefit pension which is payable for life and indexed annually,
• exchanging it to a lump sum, or
• taking a combination of a pension and a lump sum.
  
  

The importance of timing

Depending on when your pension is exchanged for a lump sum, different rates will apply. Understanding the scheme options will help you to maximise your benefit.
It’s important to know that you can only ever make the decision to convert your pension to a lump sum once. You can only make this decision at specific times.

You have two opportunities to make an application including:

• If you retire at age 55 or between the ages of 55 and 60, if you do it within six months from your last day of service.
• If you don’t do this, you have a second chance to commute if you do it within six months of turning 60.

Deciding whether to convert all or some of your pension to a lump sum, and how much to convert will depend on your:
 

• individual circumstances
• goals and lifestyle objectives.

Convert your pension to a lump sum

A lump sum factor is used to convert your fortnightly pension to a lump sum payment and the factor is based on your age. The older you are, the lower the conversion rate.

For example,

• a member converting $1 of fortnightly pension at age 55 will receive $285 as a lump sum.
• A member at age 60 will receive $250 as a lump sum.
   

For example, if your last day of service was when you were age 59 and 6 months, you could use the lump sum factor of $257. This is based on the age of 59. This applies for each $1 of fortnightly pension exchanged.

Convert your pension between age 55 to 60

If you convert your pension for a lump sum payment between age 55 and 60, the lump sum factor reduces daily. This is based on time passed since you turned 55. It equates to 1.9 cents per day. The lump sum factors for each birthday from age 55 to 60 are in the table below.

Scroll table horizontally on mobile

Exchanging your pension between age 60 to 65

Between age 60 and 65, the lump sum factor remains 250 providing the pension is exchanged for a lump sum immediately you retire. This is calculated as $250 for each $1 of fortnightly pension exchanged. If you delay taking the lump sum, which you can do for up to 13 months from your last day of service. Your application to take lump sum must be received within 6 months of your LDOS. The lump sum factor reduces by approximately 1.9 cents for every day your pension is paid.

For example,
A member who wants to receive $10,000 as a lump sum at age 60 will give up $1,040 per year. This equates to $40 a fortnight in pension payments. Regular pension payments are adjusted annually for the cost of living.

Retiring at 60 or later

If you retire at 60, or any time after 60, you have six months from your last day of service to elect to take a lump sum payment. If you don’t do this within this time frame, you can’t exchange your pension or part of your pension for a lump sum.

When you elect to take a lump sum, you can nominate one or two lump sum payment dates within 13 months of your last day of service. If you wish to have lump sums paid on two dates, both dates must be nominated at the same time on your single application form.

Retiring between age 55 and 60

If you retire at age 55 or between the ages of 55 and 60, you also have six months from your last day of service to elect to take a lump sum from your unrestricted non-preserved portion. If you don’t do this, you have a second chance to commute if you do it within six months of turning 60.

In both cases, the date of commutation must be:

• within 13 months of your last day of service, or
• reaching age 60.
   

You can nominate two dates for payment of your lump sum.

Change or cancel an application to exchange your pension

You can amend an election to:

• bring the date forward
• increase the amount of your lump sum, or
• decrease the amount of your lump sum.

You’ll need to provide medical evidence that it’s not because of a bad medical prognosis.

You can cancel your election to take a lump sum by providing notice to State Super Customer Service before it’s due to take effect. To change or cancel your application, or to exchange your pension for a lump sum, contact State Super on 1300 130 096.

Pensions before age 55

Pensions that start before you turn 55 such as invalidity, retrenchment and spouse pensions cannot be turned into a lump sum until you turn 55. Once you turn 55, you have six months to elect to take a lump sum. You have a second opportunity to do this within six months of reaching age 60.

Note: this applies to the unrestricted non-preserved portion.

Spouse pension

On your death, your eligible spouse will become entitled to a pension. The spouse pension is equivalent to two thirds of the pension you were entitled to at the time you retired, before you elected to exchange any of it for a lump sum, plus all the Consumer Price Index adjustments that would have been applied to the pension from the time you retired until your death.

An eligible spouse can be:

• your husband or wife
  your de facto partner.

Your relationship with your eligible spouse must have started before you retired and continued until your death. There are two exceptions:

• if you were on an invalidity pension. The relationship with your eligible spouse must have begun before your normal retirement age. It must have also existed for at least three years before your death, or
• if you begin a relationship with a new partner after you retire, in which you have a child together.

An eligible spouse is entitled to their deceased spouse’ pension. This will be at the rate of two-thirds of their late partner’s pension. This is regardless of whether, in their lifetime, the SSS member exchanged their pension entitlement for a lump sum. This pension is indexed annually. In certain circumstances, a child’s or student’s pension may be payable, as well as the spouse pension. Children’s pensions cannot be exchanged.

Related documents

• Visit State Super
• Understand the lump sum factor
  
• Exchange your pension for a lump sum