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To bring members more certainty for the future, we’ve created an industry-first retirement product that offers you income for life. Here are answers to some of the most common questions members raised about our new Lifetime Pension during a recent live, online Retirement Income seminar.
We know the importance of making your super last through retirement. That’s why we’ve built a retirement product that provides income for the rest of your life.
In an Australian first, exclusive to members aged 60-80, our new Lifetime Pension provides tax-free fortnightly payments for the rest of your life.
QSuper Chief of Member Experience Jason Murray said the Lifetime Pension aimed to provide greater confidence for members that their retirement savings would be there for their whole retirement.
These were the most commonly asked questions about Lifetime Pension product during the recent Retirement Income seminar.
A: To purchase a Lifetime Pension, you need to be a QSuper member with a minimum of $10,000 in your super, be aged between 60 and 80, and meet one of the following conditions:
Refer to the Product Disclosure Statement for further details about conditions.
A: The Lifetime Pension is designed to work alongside QSuper’s Income account, not to replace the Income account.
The Income account provides you with the flexibility to access your funds at any time, and set your own investment strategy and payment rates (as long as they are above the minimum).
Compared to the Income account, the Lifetime Pension is a set-and-forget product that is designed to provide ongoing income for the rest of your life.
For example, a Lifetime Pension could be used to provide confidence that your basic living costs will be met, while the Income account could be used for discretionary spending such as holidays.
A: When you purchase a Lifetime Pension your money is combined with other Lifetime Pensions into what is known as the Lifetime Pension Pool and invested in our Balanced option.
Each year the Lifetime Pension Pool achieves a financial result, which is largely based on the performance of our Balanced option, and determines your annual income adjustment for the following year.
The income adjustment to your Lifetime Pension is based on a 5% benchmark, so each year if the financial performance of the pool is above 5%, then your payments will increase. If the pool’s performance is lower than 5%, your payments would decrease.
For context, our Balanced option for the Retirement Income account has delivered a net average annual investment return of 8.98%1 over the past 10 financial years, which is well above the 5% benchmark.
A: The Lifetime Pension is designed so that you and your beneficiaries receive at least your purchase price back from your Lifetime Pension, either as income or as a death benefit.
If you choose the spouse protection option and you pass away, payments will continue to be made to your eligible spouse.
If you choose the spouse protection option and you and your spouse pass away before receiving payments equal to at least the amount used initially to purchase your Lifetime Pension, the difference is payable as a death benefit to your estate or beneficiaries.
In a very limited number of scenarios the money-back protection might be capped at a legislated maximum known as the capital access schedule. See the Product Disclosure Statement for more details.
A: Annuities are provided by life insurance companies and can be purchased with superannuation monies or outside of super.
A key difference is that a lifetime annuity provides a fixed income for life, while the Lifetime Pension provides a variable income for life, which is dependent on the returns of the investment portfolio.
The Lifetime Pension is able to provide higher rates of income as it is market-linked and invested in QSuper’s Balanced option.
This is compared to annuities that are usually invested in conservative assets and hence likely to provide lower rates of income.
There will also be differences between the amounts paid at death – annuities have a range of options but typically don’t offer the same feature as our money-back protection.
A: The pool of money that funds the Lifetime Pensions for our members is always invested in the Balanced investment option. Keep in mind that by purchasing a Lifetime Pension you will no longer see an account balance, however, the performance of the Balanced option will inform the adjustment to your annual payment amount.
A: The Australian Government treats this retirement product differently to an Income account when working out how much Age Pension you receive.
Not all of your money used to purchase a Lifetime Pension and received from a Lifetime Pension is counted towards your income and asset test.
As the assets used to purchase a Lifetime Pension are treated differently for the Age Pension asset test, you may receive more Age Pension, or become eligible for the Age Pension.
A: We believe the Lifetime Pension offers a range of benefits besides a possible Age Pension entitlement. These include higher rates of income, income that doesn’t run out, spouse protection, and a set-and-forget investing/drawdown option. However, the potential Age Pension benefits are also quite attractive for many members.
A: All fees and costs are deducted out of the Lifetime Pension pool, so there are no additional fees that you have to pay as an individual.
The administration and investment fees that are charged to the pool are the same as our Balanced investment option.
Similar to the Accumulation and Income accounts, if QSuper changes administration fees we will give notice to members at least 30 days prior to any change.
A: As you must be over 60 years of age to purchase a Lifetime Pension, your payments are tax free.
Members should note that the transfer balance cap limits the total amount of superannuation that can be transferred into a retirement phase product such as the Lifetime Pension or Income account, and there may be tax implications if you exceed that cap.
A: Yes, money that is held within the Lifetime Pension pool will count towards your overall superannuation balance. Also, it should be noted that the purchase price of the Lifetime Pension will be counted towards your transfer balance cap.
A: After age 80, the income keeps on being paid, but you can no longer open a Lifetime Pension if you hadn’t already.
A: Yes, subject to eligibility conditions.
A: No. Similar to an Income account, you cannot combine the superannuation funds of two different members. Each member can start their own Lifetime Pension with their respective super money. Both members can choose to purchase the Lifetime Pension as a single option or with the spouse protection option.
A: We cannot advise whether your spouse should transfer to QSuper, but they are most welcome to. To clarify though, you can only purchase a Lifetime Pension if you are a QSuper member.
A: With a Lifetime Pension members can choose the spouse protection option, which means that the Lifetime Pension will continue to be paid to you and/or your spouse regardless of who lives longest.
Payment rates are slightly lower for the spouse protection option, if selected, as the income stream is covering two lives.
A: If you choose the Lifetime Pension single option and you pass away before receiving payments equal to your purchase price, the difference is payable as a death benefit to your beneficiaries.
If you choose the Lifetime Pension with spouse protection, then your Lifetime Pension payments will continue to be paid to your eligible spouse.
Money-back protection is also payable if the spouse protection option is selected and both you and your spouse pass away prior to receiving payments equal to your initial purchase price.
In a very limited number of scenarios the death benefit might be capped at a legislated maximum known as the capital access schedule.
Retirement Income for Life online seminar
1. For the financial years 2010 to 2020. Past performance may not be a reliable indicator of future performance. QSuper’s Retirement Income account, Balanced option only. The return is a compound annualised return reflected after administration fees, investment fees and tax. Disclosed/reported investment returns reflect the returns of the fund and not member returns of the investment options as they do not take into account the timing of contributions, investment switches or withdrawals.
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