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It is important to note that Total Permanent Disability (TPD) payments paid into your superannuation will not affect your superannuation. A TPD benefit will not come out of your existing account balance and is an entitlement to a TPD benefit that is payable in addition to your superannuation balance. In short, if you are successful in accessing your TPD benefit, that amount is paid on top of your existing superannuation balance.
Another common concern we are asked about with client’s TPD payouts is if they are receiving Centrelink benefits, will it be affected?
It is first important to note that, the approval of your TPD claim will not impact your Centrelink entitlement as it will initially be paid into your superannuation account. Superannuation accounts are excluded from any Centrelink testing you may be subject to until you reach your “Pension Age”. This age is between ages of sixty-five (65) and sixty-seven (67).
The way your Centrelink entitlement may be impacted is when you go to withdraw your TPD and / or superannuation to your bank account. However, if you are under the pension age, the actual withdrawal of your TPD payment and / or superannuation amount may not directly impact your Centrelink ‘means testing’. Your Centrelink ‘means testing’ may only be affected depending on what you choose to do with the funds. For example, if the withdrawn amount (partial or full) is spent or used to pay debts such as a mortgage or legal fees, then there will be no impact on your Centrelink payments. It is the remaining amount left in your bank account that may be treated as ‘financial assets’ for Centrelink testing.
When withdrawing your TPD payment from your superannuation account, you will have the option to withdraw the entire balance or make a partial withdrawal. If you choose to keep the full TPD payment or a portion of it in your superannuation account, Centrelink will not include this in their ‘income tests.’
As there are a range of different Centrelink benefits and payments, the ‘income tests’ vary. It is important to seek independent financial advice when withdrawing TPD and / or superannuation funds.
There is great flexibility and options when it comes to withdrawing your TPD benefit from your superannuation account.
Once you have your TPD application approved, it is your choice with what you choose to do with that benefit. Some common options include:
1. Withdrawing the TPD benefit in full;
2. Making a partial withdrawal from your superannuation account; or
3. Leaving the money in your superannuation account and allow it to accumulate for future access.
Generally, you are unable to access your superannuation until you retire. However, there are circumstances when you can access your superannuation early if you have not reached the minimum retirement age, such as if you are unable to work due to an injury or illness. Therefore, if you are successful in obtaining a TPD payment, you will be able to withdraw the amount from your superfund.
f you have been subject to a serious illness or injury that has impacted your daily living and work, you should consider seeking legal advice. A payout could give you back the financial freedom that the injury or illness has cost you and help ease any financial burdens.
Littles Lawyers specialise in TPD personal injury and can provide you with a free consultation to gather further information about any possible legal claims and discuss your plans for the future.