Permanent incapacity or Total and Permanent Disablement – When language matters
Superannuation is a part of all our lives that we sometimes take for granted. However as we age the significance of superannuation in retirement becomes more apparent. What if we don’t make it to the normal retirement age before we are forced to leave work. What good is our superannuation at the age of 30 or 40 when due to illness or injury we are unable to continue to work.
Fortunately there have been a number of changes to Superannuation in recent years and as you may know one significant change was the introduction of MySuper. This new product became the default position for all members of superannuation funds unless they chose to opt out of the MySuper product. A significant element of MySuper is the inclusion of both death and disability insurance on everyone’s account. Whilst this may provide some peace of mind it is also important to understand the correct terminology or phrasing when discussing your insurance with the superannuation fund.
In most instances when you call your superannuation fund you won’t actually be speaking with the fund, you will be speaking with an administrator who may only have limited understanding of what it is you are asking for. If you call and say that you have stopped work because of an injury you may be directed to make a claim on the basis of permanent incapacity. For the lay person the term permanent incapacity and total and permanent disablement is often used interchangebly when describing how their injuries or illnesses have prevented them from being able to return to work. However with Superannuation funds these two phrases have very different meanings and can lead to very different outcomes.
Permanent incapacity is a designated ground upon which a person can apply to have early access to their full superannuation account balance. In most instances it is a straight forward process and after some time you will receive payment of your account balance.
However what you may have missed out on is the additional insurance benefit which is referred to as a total and permanent disability benefit. Often this insurance benefit is $60,000 or more and when you are no longer able to work that extra money can go a long way in assisting you to retrain into suitable employment or otherwise offset the loss of future superannuation contributions because you can’t work to normal retirement age.
You may wonder how something with such a significant result can be so easily confused, well in order to obtain release of your account balance on the grounds of permanent incapacity you must prove that your ill-health (whether physical or mental) makes it unlikely that you will engage in gainful employment for which you are reasonably qualified by education, training or experience. In comparison, to receive payment of a total and permanent disability benefit you need to prove that you are so disabled as a result of injury or illness that it is unlikely that you will ever again return to employment for which you are suited by education, training or experience. As you can see the wording is very similar, but with a result that can be tens of thousands of dollars apart.
If you didn’t know the difference don’t worry you are not alone. The important point is to know and to ask for what you are entitled to. If you feel that you have missed out on additional benefits from a past claim and have been unable to work it is important to contact your fund and clarify what you are entitled to. If you are still unsure you should then seek independent legal advice outside of the fund so that you can properly understand what your entitlements are and receive assistance in obtaining any entitlements you may not have known about.
Contact Super Claims Australia for all your superannuation, insurance or disability matters. We are here to help.