Assumptions and limitations for the Super Projection Calculator
The projected figures generated by this calculator aren’t guaranteed, are provided as an illustration only, and may vary from actual results. The calculator isn’t intended to be and shouldn’t be relied on when making a decision about a particular financial product. Before making any financial decisions you should consider getting some personal financial advice from an Australian Financial Service licensee.
The calculator is not able to account for different taxation and legal conditions that may occur in the future and, if they do, the result shown by this calculator may no longer be accurate.
The purpose of the Super Projection Calculator is to let you test, or model, how your choices may affect your super over the long term. Factors such as investment earnings, wage inflation, price inflation and contributions are assumed to grow in a steady, predictable fashion as described in these notes. So these figures are indicative only, and changes to any one of the assumptions may have a significant effect on your projected outcomes. You can edit assumptions, including wage inflation, price inflation and fees charged, to get an idea of the impact of the potential outcomes.
Actual outcomes will vary depending on a range of factors, including actual contributions, salary increases, investment returns, insurance premiums, fees, tax and external factors like inflation and future legislative changes. For this reason, we recommend you regularly re-visit your super arrangements.
We also note that use of the calculator is subject to the terms of our disclaimer.
If you want to know more about the way your estimate has been calculated, or the assumptions used, please contact us. And please note, the projected figures are based on current tax and legislation remaining unchanged.
Assumptions & calculation methodology
We believe the default assumptions in relation to target retirement age, drawdown period (which is the period from your target retirement age until your target super run out age) and wage and price inflation rates are reasonable as they comply with default assumptions for superannuation calculators set by ASIC. The projections generated in the calculator are based on the following assumptions.
Investments
Where you provide an account balance the calculator will assume investment growth based on your selected investment mix.
Investment earnings
Unless changed by the user the calculator assumes a medium/high risk investment approach pre-retirement and the medium risk approach in retirement. The table below details of return for each investment approach, which are net of investment and administration fees, and taxes . We believe selecting these options as default is reasonable on the basis that we expect most members to invest more aggressively prior to retirement and more conservatively in retirement.
The return assumptions provided for each investment approach have been determined by the Australian Retirement Trust Actuary as being reasonable having regard to past returns for the selected level of investment risk.
The projection assumes that in retirement, your funds will be placed in an account-based income stream. In the retirement phase the returns are higher as the investment earnings are tax-free.
| Investment risk |
Before retirement |
In retirement |
| Low risk |
Expected return of 4.35% p.a.
|
Expected return of 4.85% p.a.
|
| Low/Medium risk |
Expected return of 4.85% p.a.
|
Expected return of 5.35% p.a.
|
| Medium risk |
Expected return of 5.35% p.a.
|
Expected return of 5.85% p.a.
|
| Medium/High risk |
Expected return of 5.85% p.a.
|
Expected return of 6.35% p.a.
|
| High risk |
Expected return of 6.35% p.a.
|
Expected return of 6.85% p.a.
|
The investment returns listed above and those used in the calculator are illustrative only, and shouldn’t be used to provide an estimate of the amount of investment earnings you may receive. Past performance isn’t a reliable indicator of future performance. These investment returns are averages over rolling periods that incorporate expected losses and are assumed to remain constant over the projection period.
Voluntary contributions are projected as part of the Accumulation account.
While the returns for the default investment options are net of investment and administration fees, and taxes, if you create a custom investment return in the "Fees, Return, Insurance & Inflation" section, the return is calculated before taxes and fees and you will need to set the level of fees yourself.
Inflation
Wage inflation of 4.0% p.a. has been assumed.
Price inflation (CPI) of 2.5% p.a. has been assumed.
Today's Dollars
The results are shown in "today's dollars" so they are consistent with present value of cost of today's living standards. For the period prior to your retirement age the default discount rate is 4% p.a. The discount rate assumption is assumed to be the same as the wage inflation rate.
For the period after your retirement age the default discount rate is 2.5% p.a., which is the price inflation rate.
These assumptions may be varied at the "Fees, Return, Insurance & Inflation" section via the link on the results page.
Other investments (the investments identified by you other than your home and super) used for calculating Age Pension entitlements are assumed to increase in line with wage inflation. We think this is a reasonable assumption because, while the type of your investments is not known, we would typically expect investment assets to provide returns higher than inflation.
Personal income
Salaries are assumed to increase in line with wage inflation. In any future periods of part-time employment, your salary is reduced pro-rata.
We have assumed by default that you will continue to earn a salary from now until retirement. We think this default assumption is reasonable as we expect this to be the assumption that applies to most users. You can edit this assumption by providing information about a career break (full-time or part-time break) in the career break section on the results page.
Tax calculations allow for personal income tax rates, the Medicare levy, the low income tax offset and the Seniors and Pensioners tax offset at the rates at 1 July 2023. Threshold and offset amounts in the first year are based on 1 July 2023 rates. Rates for subsequent years are based on currently legislated rate changes. The calculation does not take into account any other potential changes in income tax or offer rates. However, the tax amounts calculated each year will differ because the calculation assumes your wage will increase in line with inflation.
Employer Type
Your chosen employer type is assumed to be continuous to retirement, and inputs and results are based on whole number of years from date of calculation.
Contributions
This calculator assumes your employer contributions, regular before-tax (salary sacrifice) contributions (which are concessional) and after-tax contributions (which are non-concessional) will go up each year in line with your salary and your salary is assumed to go up with wage inflation. It also assumes contributions will go down pro-rata when you’re working part-time. This is because employer contributions will generally go up or down with your salary. And we expect most people will also raise or lower their personal contributions in line with changes to their salary.
Employer contributions depend on the employer type you pick.
- If you’re self-employed or not working they’re assumed to be 0%. That’s because they’re not mandatory in these situations.
- If you work for a non-Queensland Government employer, we assume the rates below apply. They align with approved increases in the superannuation guarantee (SG) rate:
| Income year |
Employer contribution |
| 2023/2024 |
11% |
| 2024/2025 |
11.5% |
| 2025/2026 |
12% |
If you work for the Queensland Government, the calculator sets the employer contribution rate at 12.75% (18% for police) and the member contribution rate at 5% (6% police). This aligns with usual employer arrangements for core Queensland Government employers including police.
The calculator assumes that your contributions are based on your total yearly salary, which includes shift loading and allowances. Due to the limitations of the calculator, your total super benefit may be overestimated if your member contribution rate is based on a different salary. Please refer to the calculator limitations section below for more details.
The calculator assumes your one-off (non-concessional) contribution amount is fixed (at the time you make it) and isn't indexed.
We've assumed by default that you won’t make extra contributions (before tax, after tax or one-off). We expect this is the case for most people who use the calculator.
All employer and employee before-tax (concessional) contributions are taxed at 15%, up to the concessional contribution threshold, as at 1 July 2023. Where a concessional or non-concessional contribution goes over the relevant legislated limit, the contributions are taxed according to law as at 1 July 2023.
The model allows for the bring-forward of after-tax contributions. The contribution limits are indexed in line with the assumed rate of wage inflation.
Contributions are assumed to be spread evenly across the year.
And finally, we assume you and your partner have given your tax file numbers to your super fund as members usually provide these.
Co-contribution
In each projection year, the eligibility for a Government co-contribution is assessed based on your salary and after-tax (non-concessional) contributions. If you’re eligible, the calculator includes a co-contribution payment being made to your super account.
The co-contribution thresholds and maximum amount are based on current legislation as at 1 July 2023 and then indexed in line with wage inflation. More info is available on the website.
Low income superannuation tax offset (LISTO)
In each projection year, the eligibility for LISTO is assessed based on your salary and concessional contributions. If you’re eligible, it’s assumed a LISTO will be contributed annually to your super account.
The salary thresholds and maximum amount are based on current legislation as at 1 July 2023.
Insurance premiums
Please note that this calculator uses QSuper's insurance arrangements as at 1 July 2023 as the default assumptions to calculate insurance premiums. We think this assumption is reasonable as this is likely to represent the default cover provided to a person employed by the Queensland Government for whom this calculator is designed.
The cost of death and total and permanent disability (TPD) premiums is based on 2 units of death cover and 2 units of TPD cover for all members. The cost of each unit is based on the member’s age and the default premium rate.
For Queensland Government employees in an Accumulation account, the default salary-based income protection premiums are calculated using the age based default rate.
The calculator does not include income protection cover for other members which we believe is reasonable as most superannuation products do not provide income protection cover by default.
Death and total and permanent disability premiums are indexed each year in line with wage inflation.
No insurance premiums have been included if you’ve indicated that you’re not working or self-employed. We think this assumption is reasonable as, typically, no default cover is included under these circumstances.
The costs of insurance premiums can be altered in the "Fees, Return, Insurance & Inflation" section, accessed via the link on the results page.
Retirement age
The calculator assumes you and your partner start drawing from your respective super when each of you reaches your retirement age – we’ve used 67 as the default target retirement age for anyone who is aged under 67 and age next birthday as the default target retirement age for anyone aged 67 or older. This is aligned with default assumption for superannuation calculators set by ASIC.
Methods you can use to estimate the income you will need in retirement
- Two-thirds rule
The two-third rule is the method we have used as default for the calculator. We think this is reasonable as ASIC suggests that to maintain your current lifestyle, you’ll need about two-thirds of your current income if you’ve been living on an above average income and you’ve paid off your home loan.
- Association of Superannuation Funds of Australia (ASFA) Retirement Standard
The AFSA retirement standard benchmarks the budget needed to fund either a comfortable or modest retirement lifestyle. A comfortable retirement lifestyle assumes home ownership and includes a broad range of leisure and recreational activities, health insurance and occasional overseas holidays. Information about AFSA’s retirement standard can be found on their website.
- Set your own budget
Set your own budget by looking at your expected expenses in retirement.
Target super run out age
We have used a target super run out age of 92 as the default assumption. We think this is a reasonable assumption as it complies with the default drawdown period assumption for superannuation calculators set by ASIC. The drawdown period is the period between your target retirement age and your target super run out age.
Age Pension
Age Pension rates and thresholds (current as at July 2023) of payment are allowed for, based on your homeowner status and whether you have a spouse.
The Age Pension is subject to an asset test and an income test, and the lowest result is applied. Other assets (investments) are entered into the calculator by you. Those other assets are used by the calculator for the Age Pension asset test. Means test thresholds are indexed in line with price inflation and rates of payment are indexed in line with wage inflation.
Where an individual is still working, and has reached the qualifying age for the Age Pension, the Age Pension income test is based on deemed income.
The projection assumes that in retirement, funds are placed in an account-based income stream, and the income test is calculated. We think this is reasonable as this is the most commonly used form of income stream used by retirees. Actual payments will depend on individual circumstances and are subject to eligibility. The calculator assumes by default that you will own your own home at retirement. We think this assumption is reasonable assumption as we expect this will be the position for most users of the calculator and because it is one of the default age pension assumptions for superannuation calculators set by ASIC.
The calculator also assumes by default that you will not have other non-superannuation assets at retirement. We think this is a reasonable assumption as we need to know the amount of your other investments in order for the calculator to produce a reasonably accurate output and because it is one of the default age pension assumptions for superannuation calculators set by ASIC.
The calculators assumes that in retirement you will meet the eligibility requirements for an age pension set out in section 43 of the Social Security Act 1991. We think this is a reasonable assumption as it is one of the default age pension assumptions for superannuation calculators set by ASIC.
One- off purchase when you retire
The calculator assumes by default that you will not make any one-off purchases when you retire. We think this is reasonable as we need to know the amount of the proposed one-off purchase in order for the calculator to produce a reasonably accurate output.
For couples, the tool calculates that each individual will take 50% of the one-off purchase value entered at their retirement age. If one party's account balance is depleted the remaining value will be taken from the partner. If the selected amount of a one-off purchase at retirement exceeds your balance at retirement, the calculator will take your entire superannuation account as a one-off lump sum.
Drawings
The calculator calculates superannuation drawings each year based on how much income is required to have a consistent income between retirement and your target super run out age, allowing for other income and age pension income.
For couples, the total drawings are then deducted from each superannuation fund in proportion to the balance of each account.
The minimum annual account-based pension payments from your super account have been included. These minimum payment amounts are required by law to be taken from account-based superannuation pensions each year and vary based on your age. Where the minimum is higher than your target income in any year, the calculator treats the surplus as having been withdrawn from super (as is required) and invested outside super using the same investment mix as your superannuation money.
Limitations of calculator
As a result of the limitations below, the estimates made by the calculator may be different to actual future outcomes. The estimate of future super benefit is illustrative only and doesn't accurately predict your future super and actual Centrelink Age Pension payments.
We've made no provision for any existing surcharge debt. So the estimate may be higher than actual future outcomes (because repaying the debt hasn’t been factored into the calculator).
This calculator doesn't cater for members in a Defined Benefit account.
For core Queensland government employees, our calculator assumes your employer and member contributions are a percentage of the total yearly salary you put in. But employer contributions are generally calculated off your salary including shift-loading and allowances (if these apply). And your member contributions are calculated off your base salary. If the two salary figures are different, this may result in overestimating your benefit.
We calculate default insurance premiums at the default rate only for insurance provided to those with a QSuper account as at 1 July 2023. So the calculator may overestimate your benefit if actual insurance costs are higher. Or underestimate your benefit if actual costs are lower. If your insurance costs are different, you can change this on the Fees, Returns, Insurance and Inflation section on the results page.
The calculator applies investment returns minus fees and taxes unless you create a custom investment return. If you do, the return is applied minus tax, but you’ll need to detail the fees that apply. Your actual fees may be higher or lower than the assumed cost and this may impact your retirement benefit. So the calculator may give an overestimate (if actual fees and taxes are higher) or an underestimate (if actual fees and taxes are lower). You can adjust the fees to get an idea of the impact.
Any future super benefit estimates the calculator makes are illustrative only. They don't accurately predict your future super benefit.
Changing price inflation in the calculator only affects:
- The transfer balance cap that limits the amount you can transfer into a pension
- Age Pension asset test thresholds
- Age Pension income thresholds
- The Age Pension deeming threshold
- The discount rate for the calculation of amounts in today’s dollars for periods post-retirement
We've made no provision for the reinvestment of any tax savings that you may get from changing your contributions from after-tax to before-tax.
The calculator only allows you to choose a current age of between 18 and 74 and a target retirement age of between 60 and 75. So it's not suitable if you’re not currently within that age range or if you intend to retire earlier than 60 or later than 75.