Your retirement options. Making the most of your retirement

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Your retirement




For starters, we all have different needs and resources available to us. There are also different sources of retirement income – be it the government Age Pension, your super savings, an inheritance, or maybe even continued income from paid employment. Then there’s government legislation and taxation – put it all together and there’s a long list of possibilities.

Not surprisingly, there’s a whole range of retirement income products available to cater for various needs. So which one’s best for you? Chances are, it’s probably a combination of products – arranged to maximise income to suit your needs. In this booklet we introduce some of the retirement income options available to you.

VicSuper – making sense of


A VicSuper financial planner can take you through these options in more detail. Your planner will help you make sense of the decisions that need to be made, and work with you to choose a retirement solution that makes the most of the resources you’ve got – which means you get to make the most of your retirement.

We can help

We know that retirement can be complicated, that’s why with VicSuper, you’re never alone. We provide a range of services to help you keep in touch with your accounts – and with us: • expert financial advice either face-to-face or

over the phone, with our financial planners always ready to answer your questions and help you plan your future (and remember, in most cases there’s no additional charge for members)

• phone support on 1300 366 216 for everything from quick questions about your account, or more detailed questions about your retirement planning

• educational seminars where you can come along and learn more about retirement planning and your options.

Retirement – it’s an exciting time, but it’s a challenging time. So many choices,

so many possibilities…so how do you make sure you can afford it? The fact is,

there’s no single financial solution that will suit everyone in retirement.

Your retirement – your choice

* Results based on members who had Statements of Advice prepared and who completed an Interview Evaluation form between July 2014 to March 2015. 1,221 of 1,222 of those surveyed would recommend VicSuper.

^ Member comment after meeting with a VicSuper financial planner - 12 January 2015.

99.9% of members surveyed would recommend VicSuper*:


At VicSuper, we’ve been helping Victorians generate the retirement income they need for nearly 20 years. As a profit-to-member fund, we know how important it is to get the right advice, at great value for money. That’s why in most cases there’s no additional cost to our members (and it’s only $200 for non-members). Plus, we don’t pay



Income sources

For most of us, the answer to our retirement income needs will actually be a combination of income sources, which takes into account: • whether you qualify for the Age Pension

(and if so, how much)

• any additional resources you have available (eg your super savings, and other assets) • how long you’ll need that money to last • your needs versus your wants (eg the ‘must

haves’ versus the ‘nice to haves’), and how they might vary throughout retirement. What exactly is retirement income? There are two main types of retirement income that can be provided using super money – guaranteed income streams, such as

annuities and flexible income streams,

available through account-based pensions. A guaranteed income stream gives you a guaranteed amount of income for a set period of time (or for the rest of your life), providing security and peace of mind.

A flexible income stream allows you to vary the amount of income you draw from the available pool as often as you like (although some limits may apply). It also allows you to choose (and change along the way) how your money is invested between a range of investment options. While flexible, it also requires a disciplined approach to ensure the money lasts. How will you spend your income? Generally, you’ll spend your income in two ways – on things you need in order to maintain a basic standard of living (food, clothing, utilities, and housing), and on things you want to help make retirement more enjoyable and fulfilling (holidays, entertainment, renovations, or extra for emergencies).



The best retirement income solution will generally be one that uses both types

of income and combines it with the Age Pension (if applicable) – helping you to

pace your income to suit the pace of your retirement.

Putting it all together –

the retirement income solution


Age Guaranteed Fixed Term Income

Flexible Income Peak spending years


Guaranteed Income for Life


(what you'd like)


(what you must have) Centrelink Age Pension

Match your income to your goals

It’s important to match your income to your goals, which can vary as retirement progresses. The need for additional guaranteed income, for example, may be higher in the earlier years of retirement, when we’re living more active lives and enjoying a more diverse range of leisure pursuits. Typically (although not always!), those pursuits taper as we get older. Layering your income can help meet financial goals over time*

It makes a lot of sense to ensure you’ll always have an income no matter what, to help fund those essential needs, and to have some additional flexibility to afford the things you want to have.



Perhaps the most well-known form of retirement income is the government’s Age Pension. If eligible, it can generally provide you with some of your retirement income – a maximum per fortnight of $860.20 for a single person and $1,296.80 for a couple1.

But while it might be a great starting point, for most of us, it probably won’t be enough to support the kind of retirement lifestyle we’re hoping for.

The graph below shows that there’s a gap even between the maximum Age Pension allowance

and the typical cost of a ‘modest’ retirement lifestyle.

A modest lifestyle would cover some of those basic needs only (food, shelter, utilities and nothing more).

Instead, most of us hope for a little more from retirement – at the very least a ‘comfortable’ lifestyle that allows for the occasional holiday and meal out at a restaurant. To achieve that, we need to start looking beyond the Age Pension for sources of income.

The Age Pension – some pros and cons

The Age Pension can provide a great base, but it may not be enough to provide the sort of retirement lifestyle that you desire. Your VicSuper financial planner can help you determine whether you can build on the Age Pension (if you qualify) with other tax-effective sources of retirement income.

Historical gap between ASFA Retirement Standard and Age Pension2

$15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000 $55,000 $60,000 $65,000

Mar 04 Mar 05 Mar 06 Mar 07 Mar 08 Mar 09 Mar 10 Mar 11 Mar 12 Mar 13 Mar 14 Mar 15 ASFA Comfortable standard ASFA Modest standard Age pension

1. As at 20 March 2015. These figures include the supplements that may be available.

2. As at March 2015. ASFA Retirement Standards and Age Pension rates shown here are for couples.


*Based on projected investment earnings of 7.9% pa for the default Growth investment option, indexed at 3% pa and the VicSuper Flexible Income lasting a total of 30 years.



Guaranteed Income accounts VicSuper offers two guaranteed income accounts* – Guaranteed Income for Life, which pays an income for the rest of your life, and Guaranteed Fixed Term Income, which pays an income for your chosen term (from 1-40 years). One, or both, of these accounts may suit you, depending on your circumstances. How do they work?

In return for your initial lump sum investment, you receive a series of payments for a period of time, as nominated by you (either as monthly, quarterly, half-yearly or yearly payments). They’re generally best suited to those who have a minimum of $50,000 to invest.

The income you receive is determined when you first invest, and is then paid over your nominated term – regardless of market ups and downs. And, if you have a Guaranteed Fixed Term Income Account, you can elect to receive some or all of your initial investment amount in your regular payments, or as a lump sum payment at the end of the term.

Our Guaranteed Income accounts also have the following features:

• ability to choose an option that protects you from increases in the cost of living

• option to nominate a partner to receive any remaining benefits in your account as an ongoing income if you die

• option to choose a withdrawal period, when some money will be paid to your beneficiaries or estate if you die during that period • the cost of administering the account is

included when the payment rate is first determined, so there are no ongoing direct fees or charges

• retirement income payments are tax-free • favourable assessment for eligibility for the

Centrelink age pension, particularly under the income test.

Guaranteed income streams provide a regular payment amount over a fixed

period of time or lifetime. They may be an effective way to ensure you can cover

your basic needs throughout retirement. If you’re looking to supplement the Age

Pension with a secure and regular income payment, a guaranteed income stream

may be for you.

Guaranteed income streams –

security and certainty

Guaranteed income – covering the essentials

Guaranteed income accounts are typically best suited to covering your essential income needs (such as rates, rent, food, clothing). They can also be useful for providing a reliable income boost for those earlier years of retirement when your overall spending is more likely to be at its peak.



Joanne opts for certainty

Joanne is 64 and retired. She wants part of her income to be more certain for the rest of her life, even if she lives much longer than expected. She also wants some inflation protection. Joanne has $350,000 in superannuation. She invests $100,000 into a Guaranteed Income for Life account and the remaining $250,000 in a VicSuper Flexible Income. The Guaranteed Income for Life, with the partial indexation option chosen, will pay her a $5,000 in the first year* and provide future payments which will provide some protection in periods of high inflation. Through her VicSuper Flexible Income she has chosen to receive $12,500 a year. By combining these income streams with the Age Pension, she’s got enough to cover her basic needs and afford a comfortable life. Joanne’s income and investment earnings are tax-free.



Flexible income streams are about choice – how you’ll invest your income, and

how you’ll take that income, including how much and how often. It can be a

great option for covering the things you want – the little (or big) extras such as

holidays, renovations, or even unexpected emergencies.

Flexible income streams –

the choice is yours

Keeping things flexible

Flexible income is ideal for covering life’s little extras – especially if you’ve already covered the essentials with a guaranteed income stream. Talk to your VicSuper financial planner to find out more about how flexible income could work with your overall retirement plan.

Age at commencement

or 1 July each year Minimum payment

Under 65 4% 65-74 5% 75-79 6% 80-84 7% 85-89 9% 90-94 11% 95 and over 14%

Minimum annual super payments It’s up to you – VicSuper Flexible Income

VicSuper’s Flexible Income allows you to: • decide how you’d like to invest your money

by selecting from our menu of nine investment options (this product is

market-linked, so your investment can rise or fall depending on the options you select) • choose how much income you wish to

receive each year (subject to meeting the Government’s minimum)

• choose how often payments are made to your nominated bank account

• withdraw some or all of the balance if you need the cash, or if you just change your mind (minimum withdrawal of $1,000) • arrange to have any money remaining in

your account paid to beneficiaries or an estate if you die

• access your account 24/7 with VicSuper MembersOnline – a secure online service that allows you to monitor and manage your account, anywhere, any time.

Plus, income payments (for those aged 60 and above) and investment earnings are tax-free.

Some limits apply



Bob and Jill keep their options open



Keeping your options open with TTR

TTR incomes can be a great option if you want to build your super savings or ease into retirement by reducing your work hours and still maintain your income. They do come with a number of regulations and tax considerations though, so it’s particularly important to get some good advice before embarking on this strategy. Your VicSuper financial planner can tell you more. Transition to Retirement feature – flexibility

and choice

With the VicSuper TTR feature you can: • continue working full time and benefit from

the tax savings available, or reduce your work hours and maintain your take-home pay through the TTR strategy

• decide how your money is invested by selecting from our menu of nine investment options (this product is linked to market returns, so your investment can rise or fall depending on the options you select) • choose how much income you wish to

receive each year and change that amount at any time (within limits set by the government) • choose how often payments are made to

your nominated bank account (twice-monthly, monthly, quarterly, half-yearly or yearly) • access your account 24/7 with VicSuper

MembersOnline – a secure online service that allows you to monitor and manage your account, anywhere, any time.

If you’ve reached the preservation age (when you can legally access your super),

but want to continue working, a transition to retirement (TTR) income could be for

you. A VicSuper Flexible Income with TTR feature allows you to continue working

and can help boost your super through salary sacrifice, all while taking some of

your super as flexible income.

Transition to retirement –

making a smooth change

Some limits apply

As the TTR feature is part of the VicSuper Flexible Income account, the same minimum annual withdrawal amounts apply – starting at 4% per year if you’re aged 55−64.

Lump sum withdrawals are generally not allowed, and the maximum allowable income is 10% of the account balance each year. Refer to the table on page 10 for minimum withdrawals for your age.

A word on tax*

Investment earnings on your account are tax-free and the retirement income is tax-free if you’re aged 60 or over. Tax may be payable on TTR income if you are aged 55-59, however you may be entitled to a tax-free amount and a 15% rebate on the taxable amount. This strategy is generally best suited to those with a taxable income greater than $19,400 and therefore have a marginal tax rate of 19% or more.



Geoff makes a gradual transition




Here are six things you can be doing right now to get your

retirement income needs on track:

Take charge of your retirement today

We can help

A VicSuper financial planner can take you through your options in more detail, working with you to understand your current situation and your needs – so that together you can create a plan that makes the most of what you’ve got, and gives you the best chance of achieving your retirement dreams. Make the most of your retirement – call VicSuper on 1300 366 216, or visit

Think about the bigger picture for your retirement. Make a wish list. Think

about what retirement means to you and what your expectations are.

Look at your life expectancy to estimate how long your retirement income

needs to last.

Prepare a retirement spending plan that clearly separates your needs

and wants.

Get to know your options for retirement income, and think about how

secure or flexible you’d like your income to be.

Decide whether you would like to leave any of your savings to your family

or friends.


The information contained in this brochure is given in good faith and has been derived from sources believed to be reliable and accurate, based on laws current at 12 May 2015. No warranty as to the accuracy or completeness of this information is given and no responsibility is accepted by VicSuper Pty Ltd or its employees for any loss or damage arising from reliance on the information provided. This publication does not take into account your financial situation, objectives or needs. VicSuper recommends you seek professional advice for your own circumstances. Visit and obtain a copy of the relevant Product Disclosure Statements. You should consider this document in deciding whether VicSuper is right for you. You can contact VicSuper to make an appointment to see one of our VicSuper representatives.

VicSuper Pty Ltd ABN 69 087 619 412 (‘VicSuper’) is the Trustee of VicSuper Fund ABN 85 977 964 496. The Trustee holds an Australian Financial Services Licence (AFSL 237333) under the Corporations Act 2001 (Cwlth) and a RSE Licence under the Superannuation Industry (Supervision) Act

1993 (Cwlth). Under its AFSL, VicSuper is licensed to deal in, and provide financial product advice on superannuation products. At present, VicSuper representatives are limited to providing financial product advice on VicSuper products; ESSSuper - Revised, New, SERB and Transport Schemes; providing advice on whether a member should consolidate or roll over their superannuation holdings into VicSuper (excluding personal advice on self-managed superannuation funds); and general superannuation matters.




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