Lifetime Pension and the Age Pension

• Age 67
• Goals Plans to retire next year
• Super $550,000
• Assets Owns his home, and $75,000 in other assets (vehicle and household contents)
• Income No additional income sources

As Walter has total assets of $625,000, he would not normally be entitled to receive the Age Pension. However, he has decided to purchase a QSuper Lifetime Pension for $250,000 and open a QSuper Retirement Income account with the remaining $300,000 of his super.

Because only 60% of the Lifetime Pension purchase price is assessed by the Age Pension assets test, Walter now has a lower amount of assessable assets.

Walter is now eligible for an Age Pension of $4,505 per year and a Commonwealth Pensioner Concession Card, so his overall annual income in retirement has increased by $9,513.¹

Walter will now benefit from:

• Fortnightly payments for the rest of his life from his Lifetime Pension
• Age Pension payments and concession card discounts¹
• Income from his Retirement Income account for as long as the balance lasts
• Flexibility to make withdrawals from his Retirement Income account as needed.

1. Subject to Centrelink assessing him as eligible.
2. Age Pension income estimate based on income and assets tests as at 1 July 2020.
3. Income based on minimum withdrawal rate of 5%. Income amount will vary each year.
4. Lifetime Pension payments based on 2020-21 financial year income rates. Income amount will vary each year.

• Age Both 67
• Goals Qualify for Age Pension benefits
• Super $930,000

Betty and Geoff are both 67-year-old retired teachers with a combined $930,000 in super.

They may qualify for some Age Pension in years where there is a market downturn, but generally they are not eligible for Age Pension benefits.

As the graph shows, even with a balance of this size, if they withdraw the minimum from their Retirement Income account, they will not achieve the ASFA Retirement Standard for a comfortable level of income in the early years of retirement.

However, if they were advised to split their balance between the Retirement Income account and the Lifetime Pension, they would be able to:

• Target a significantly higher level of income
• Qualify for the Age Pension and the Pensioner Concession Card¹
• Be less affected by market movements
• Experience a more stable income stream in retirement.

This is a stronger outcome for Betty and Geoff, as they gain additional income in their early, more active years, and receive the additional benefits of the Pensioner Concession Card.

In this example, Betty and Geoff were advised to put half of their balance into a QSuper Lifetime Pension. This enables Betty and Geoff to draw a target income of $80,000 in total per year from their Age Pension, Lifetime Pension, and account-based pension, using the flexibility of their account-based pension to ensure their income remains consistent.

Historic average investment performance has been used for illustrative purposes, and these graphs may not be to scale. Past performance is not a reliable indicator of future performance.

1. Subject to Centrelink assessing him as eligible.

• Age Both 67
• Goals To have more enjoyable early years
• Super $800,000 combined

Gita and Vijay are retired healthcare workers with a combined $800,000 in super. They qualify for a part pension but may lose this benefit in years when the market performs particularly well.

As the first graph shows, if withdrawing the minimum from their Retirement Income account, even with their part pension included, they will not achieve the ASFA Retirement Standard for a comfortable level of income in the early years of retirement.

However, if they were advised to purchase a Lifetime Pension with some of their balance, they would be able to target an income that is significantly higher and more stable, and could qualify for higher Age Pension payments.

In the second graph, Gita and Vijay purchased a Lifetime Pension using half of their balance. By doing so, they can draw an income of $75,000 per year in total, using the flexibility of their account-based pension to ensure their income remains consistent over time.

Historic average investment performance has been used for illustrative purposes, and these graphs may not be to scale. Past performance is not a reliable indicator of future performance.