✓ 67 year old couple
✓ $900,000 in super
✓ $100,000 in assets
✓ $91,000 annual retirement income goal
✓ MyNorth Lifetime Income account
✓ Account-based pensions
✓ $332,556 age pension projected in first 10 years
As 67-year-old eligible retirees, David and Sarah have just made a $300,000 downsizer contribution to their super, bringing their combined balance to $900,000. Outside super, they own $100,000 in assets and receive no age pension. David and Sarah are a couple, own their own home, and ideally would like $91,000 in annual income (at today’s value, indexed to CPI), access to the age pension, and a Pensioner Concession Card.
David and Sarah put 50% of their super money into Lifetime Income accounts and 50% into account-based pensions and hold the same investment options through both accounts.
As shown below, if David and Sarah held their full retirement savings in account-based pensions, that full amount would count towards the Centrelink asset test, and when added to their other assets, this combined amount would disqualify them from the age pension in year 1 (although they qualify for a part age pension in year 2 and onwards).
By placing half of their super into MyNorth Lifetime Income accounts, the amount counted towards the assets test is reduced as shown in the graph (right).
This 50/50 mix also means David and Sarah can access the age pension immediately rather than waiting a further year as they would if they put 100% of their funds in account-based pensions.
With only account-based pensions, David and Sarah would have to rely solely on the age pension for their income after their account-based pensions run out at age 90. And, their cumulative age pension payments for the first 10 years would be a projected $250,653.
By using the combination of an account-based pension and Lifetime Income account, David and Sarah will never rely solely on the age pension, as they will continue to receive income from their Lifetime Income accounts for the rest of their life after their account-based pensions run out at age 91. Also, their age pension payments for the first 10 years would be a projected $332,556, noticeably more than they would receive with only account-based pensions.
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Assumptions
- Balanced RP = 6.5% across all account structures;
- We have ignored admin, investment and advisers fees;
- Other than stated above, we have not considered any other Centrelink assessable assets and income
- Age pension is based on July 2023 couple homeowner thresholds and rate; and
- All values are nominal.
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Important information
The information on this page has been provided by NMMT Limited ABN 42 058 835 573, AFSL 234653 (NMMT). It contains general advice only, does not take account of your client’s personal objectives, financial situation or needs, and a client should consider whether this information is appropriate for them before making any decisions. It’s important your client consider their circumstances and read the relevant product disclosure statement (PDS), investor directed portfolio guide (IDPS Guide) and target market determination (TMD), available from northonline.com.au or by contacting the North Service Centre on 1800 667 841, before deciding what’s right for them.
MyNorth Investment and North Investment are operated by NMMT. MyNorth Investment Guarantee is issued by National Mutual Funds Management Limited ABN 32 006 787 720, AFSL 234652 (NMFM). MyNorth Super and Pension (including MyNorth Lifetime), MyNorth Super and Pension Guarantee and North Super and Pension are issued by N.M. Superannuation Proprietary Limited (ABN 31 008 428 322, AFSL 234654 (NM Super) as trustee of the Wealth Personal Superannuation and Pension Fund (the Fund) ABN 92 381 911 598. NMMT issues the interests in and is the responsible entity for MyNorth Managed Portfolios. All managed portfolios may not be available across all products on the North platform. All of the products above are referred to collectively as MyNorth Products. The information on this page is provided only for the use of advisers, it is not intended for clients. This page provides a brief overview of some of the benefits of investing in MyNorth Products. The adviser remains responsible for any advice/services they provide to clients including making their own inquiries and ensuring that the advice/services are appropriate and in accordance with all legal requirements.
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North and MyNorth are trademarks registered to NMMT.
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