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Combine the Age Pension with your super in retirement
Our Lifetime Pension is designed to work together with the Age Pension, to give you more financial security in retirement.
Not all of your money that you use to purchase a Lifetime Pension is counted towards Centrelink's income and assets tests. This means you could receive the Age Pension if you were otherwise not eligible, or receive higher Age Pension payments than you previously qualified for.
Here's how our Retirement Income account and Lifetime Pension count towards the income and assets tests when Centrelink assesses your eligibility for the Age Pension:
These hypothetical examples help explain the potential benefits of using a Lifetime Pension together with the Age Pension.2
Walter is 67 years old and plans to retire next year. He has total assets of $625,000 and would not normally be entitled to receive the Age Pension.
Betty and Geoff are both 67-year-old retired teachers, with a combined $930,000 in super.
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 when their super is performing well.
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:
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.
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:
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.
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.
Find out how much extra you could get from the Age Pension (if eligible) using a combination of different retirement income products.
The maximum base rate you can get from Centrelink's Age Pension in 2020-21 are $860.60 per fortnight for a single person or $1,297.40 per fortnight for a couple (unless living apart because of ill health). A part pension is less than this amount.
In addition, there are pension supplements available to help with the cost of living.
Using a QSuper Lifetime Pension in retirement could make you eligible for a part or full Age Pension.
To be eligible to receive the Age Pension, you must be 66 or 67 years old, depending on your date of birth.
When you can access your super is different to when you can access the Age Pension.
As at 1 July 2020, the Age Pension assets test means a single person can have up to $583,000 in assets if you own your home, or $797,500 if you don't own a home.
A couple can have up to $876,500 for homeowners, or $1,091,000 for non-homeowners, with a higher threshold for couples who are living apart because of ill health.
Note that assets includes more than just money in the bank or your super; it also includes other things you own like your home contents, car, or caravan.
You can find more detailed product information about Lifetime Pension or see our list of frequently asked questions for financial advisers about Lifetime Pension.
If you have any questions, please contact us.
If you've made a decision and want an income for life, purchase your Lifetime Pension now. Not yet a member?
Professional advice could help you decide whether you might benefit from combining our retirement solutions with the Age Pension.
1. Under the means test rules, 60% of the purchase price is assessed until you reach the life expectancy for a 65-year-old male, which is currently 84 years old. See the Australian Bureau of Statistics for the latest life expectancy figures.
2. This case study is provided for illustrative and educational purposes only, and the members shown are not real. Additionally, figures may be rounded for ease of understanding. Members should seek advice from a qualified licensed professional, regarding their own circumstances.
3. See Services Australia's Centrelink page as at 23 February 2021.