Whilst SSS is basically a pension scheme, at certain times you have an option to exchange (commute) all or part of a pension entitlement to a lump sum. You can only ever make one application to exchange your pension and that application must be made within set timeframes.
An application to exchange your pension for a lump sum on or after age 55 must be made within the six months immediately before or after your nominated retirement date. If you have not made an application before your 60th birthday, you have a second chance to apply within the six months after reaching your 60th birthday.
When is the lump sum benefit payable?
If your application is received in the six months before you reach your retirement date, your lump sum benefit is payable on your retirement date and will be paid to you soon after.
If your application is made in the six months after your pension commenced, your lump sum is payable on the day the scheme administrator receives your application to commute.
If you have not made an application prior to your 60th birthday and your application is forwarded to the administrator in the six months before your 60th birthday, your lump sum benefit is payable at age 60.
If your second chance application is made in the six months after your 60th birthday, the lump sum is payable on the day your application is received by the scheme administrator.
If you wish, you may nominate a date you would like your lump sum payment/s to be paid. However, the effective date you nominate cannot be before your 55th birthday (or your 60th birthday if it is a second chance application) and cannot be more than 13 months after the date you would first be eligible to receive a lump sum payment.
Instead of receiving a single lump sum payment, you can also request to receive two separate lump sum payments on different dates.
Spouse benefits and commutations
Exchanging all or part of your pension for a lump sum does not affect the spouse or de facto pension entitlement. Under the scheme rules, a reversionary beneficiary is entitled to a pension at the rate of two-thirds of the pension the deceased member would have been receiving at the time of their death. The pension entitlement is payable regardless of whether the scheme member commuted their pension.
For more information, please refer to SSS Fact Sheet 14: Exchanging your pension for a lump sum. Other topics covered in this fact sheet include:
- How much is the lump sum amount payable?
- Nominating lump sum payment dates
- Cancelling or changing a lump sum application