Commutation or exchanging a pension for a lump sum
While SSS is basically a pension scheme, in the case of an eligible spouse who survives a member, an option to exchange (commute) all or part of a pension entitlement to a lump sum is available at specific timeframes.
A spouse pension member can only ever make one application to commute their pension.
Pensions that commence before the spouse reaches age 55
If the spouse pension member had not reached age 55 at the time of death of the member, or pension member, an application to exchange some or all of a pension for a lump sum:
a) must be made within six months immediately before or after the spouse's 55th birthday, or
b) if an application is not made during the time period referred to in a), a spouse pension member will have a second chance to apply in the six months immediately before or after their 60th birthday.
Unless a specific (later) payment date is nominated, the lump sum is payable on the spouse member's 55th or 60th birthday.
If an application is made in the six months after the spouse reaches age 55 or 60, the lump sum is payable on the day the scheme administrator receives the completed application.
Pensions that commence on or after age 55
If the spouse pension member was aged between 55 and 60 when the pension commenced, an application to exchange some or all of a pension for a lump sum
a) must be made within six months of the date of death of the member or pension member.
or
b) if an application is not made during the time period referred to in a), a spouse pension member will have a second chance to apply in the six months immediately before or after their 60th birthday.
Pensions that commence on or after age 60
If the spouse pension member had reached age 60 at the time of death of the member, or pension member, an application to exchange some or all of a pension for a lump sum must be made within 6 months of the date of death of the member or pension member.
For more information, please refer to SSS Fact Sheet 14: Exchanging your pension for a lump sum.
Reversionary benefits and commutations
If you decide to exchange all or part of your pension for a lump sum, the spouse or de facto pension entitlement is not affected.
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 member commuted their pension.
Note: A child or student pension entitlement cannot generally be exchanged for a lump sum.
How much of the spouse pension can be exchanged for a lump sum?
In most cases, all of the pension that is payable to an eligible spouse or de facto partner can be exchanged for a lump sum, provided that the application to exchange the pension for a lump sum is made within the specified time.
A pension member can, however, nominate a specific amount of pension that he/she wishes to exchange and receive the remaining amount as a pension.
If pension payments continue to be paid after the date an application to commute or exchange is due to be paid, a reversionary pension may become overpaid. Any overpaid pension will be deducted from the lump sum amount payable.
For more information, please refer to SSS Fact Sheet 14: Exchanging your pension for a lump sum.