Jennifer dies before Luke takes his PRSA benefits. If Jennifer dies before Luke takes his PRSA benefits, what happens to Jennifer's PAO entitlement?

• A. The Courts can order a payment to be made from the PRSA to Jennifer's dependants
• B. The PAO lapses without benefit.
• C. A transfer value is paid from the PRSA to Jennifer's estate, within 3 months of her death
• D. 25% of the PRSA is paid to Jennifer's next of kin

Answer: (B)

PAO entitlements are personal benefits that are only realized if the member is alive to draw them. If the member dies before starting to draw the PAO, the right to the PAO does not transfer to the estate or to dependants; it simply ends. This means there is no court-ordered payment, no transfer value to the estate, and no portion to next of kin. In this scenario, Jennifer’s PAO entitlement lapses without benefit because the option requires the member to be drawing the benefit, and death prior to that point extinguishes the entitlement.