After a TPD claim is accepted the benefit is paid to your super fund and released under the fund rules, and returning to work later does not usually undo a payment that was properly made.
When a TPD claim is accepted, the insurer pays the benefit to your superannuation fund, and the fund then releases it to you under the super rules. Whether you can work again afterwards depends on your own circumstances, but in most cases a properly paid TPD benefit is not taken back just because you later do some work.
This article explains the steps that follow acceptance, what returning to work can mean, and how this differs from income protection. It is general information, not advice on your own policy.
The insurer pays the fund, not you
A TPD benefit is paid under an insurance policy held by your super fund. When the insurer accepts your claim, it pays the sum insured to the fund, and the fund adds it to your account. See our FAQ on what is a TPD claim for the background.
The fund then decides whether to release the money. Super law only allows release in set circumstances, and permanent incapacity is one of them. The fund has its own test and its own paperwork, so acceptance by the insurer and release by the fund are two separate steps. They are often handled by the same claim file, but you should confirm with the fund what it needs from you.
What the fund may ask you to confirm
Before releasing the money, a fund may ask you to complete forms, confirm your identity and confirm the account details. If there is more than one fund involved, each one is dealt with separately. Our FAQ on multiple super funds and TPD explains why that can happen.
Deductions can also arise, such as unpaid fees or premiums. The insurer or fund should be able to explain any deduction. If something does not look right, ask for it in writing.
Can you work again after a TPD payout
You are generally free to work again. Super law does not stop a person from taking a job after a benefit is released, and a TPD benefit is not a pension that stops when you earn income.
The more important question is what you told the insurer when you claimed. Most TPD policies ask whether you are unlikely ever to return to work suited to your education, training and experience. If your claim was accepted on that basis, and your statements were honest and complete, a later change in your health or a small amount of work you did not expect to do does not normally reopen the decision.
Problems can arise if the facts given to the insurer were inaccurate at the time. A claim that was accepted on incomplete or misleading information can be challenged. This is why the claim forms and medical evidence should be accurate from the start. See our FAQ on whether you can claim TPD while still working a little.
If you are unsure how a particular job might be viewed against your policy wording, get advice before you start, not after.
How this differs from income protection
Income protection and TPD work in different ways, and returning to work affects them differently.
| TPD benefit | Income protection | |
|---|---|---|
| How it is paid | One lump sum, paid to the fund | Regular payments over time |
| Purpose | Compensates for a permanent loss of work capacity | Replaces part of your income while you cannot work |
| Effect of returning to work | Usually no effect once properly paid | Payments often reduce or stop as your income returns |
| Ongoing reporting | Usually none after release | Often regular updates to the fund with a doctors certificate |
Our article on income protection and TPD sets out the comparison in more detail. If you have both kinds of cover, the two claims run on separate tracks, and what you tell one insurer should be consistent with what you tell the other.
Money questions that follow a payout
Once a benefit is released, questions about tax, Centrelink and other payments often come up. They arise out of the claim, because the claim produced the money. They are not questions the firm can answer for you.
Your own position depends on your age, your fund, your other income and your family circumstances. Those questions belong with your accountant or financial adviser. The firm gives legal advice, not tax or financial advice. Our article on whether a TPD payout is taxable explains why the question arises, and no more than that.
Other claims sitting beside the TPD claim
A TPD benefit does not depend on fault. It can sit alongside a workers compensation or other injury claim arising from the same event, although some of those schemes take it into account. Our article on claiming TPD while on workers compensation covers how the two interact. Strict timeframes set by the regulator, the scheme or the policy can apply to each claim, so it is worth getting advice promptly.
What to do next
If your TPD claim has been accepted, keep a copy of the acceptance letter and the fund correspondence, and ask the fund in writing what it needs before it releases the money. Take your questions about tax and Centrelink to your accountant or financial adviser.
If you are thinking about returning to work, or you have already started, keep records of what you do and when, and get advice on how it fits with your policy wording before you make decisions.
If you have not yet claimed, try our claim check, read our FAQ on time limits for personal injury claims in Australia, or contact us to talk through your situation.
Sources
- Australian Securities and Investments Commission, Report 633, Holes in the safety net: a review of TPD insurance claims, October 2019.
- Superannuation Industry (Supervision) Regulations 1994 (Cth), conditions of release, including permanent incapacity.
- Australian Taxation Office, withdrawing and using your super.