Australian Super
 

Assumptions and Other Information

  • The purpose of the Transition to Retirement calculator is to demonstrate how you may be able to boost your superannuation savings during your final years of employment. This may involve reducing your taxable income through salary sacrifice and supplementing your take-home pay with an income stream drawn from a Transition to Retirement pension.
  • The optimum strategy is based on maximising the total of your superannuation and pension account balances each year while ensuring that the sum of:
    • the pension payments you expect to receive (which are concessionally taxed); and
    • your salary, after allowing for extra salary sacrifice contributions;
    produces the same net take-home pay after tax as you would expect to apply for that year if you did not adopt this strategy. In some cases, it may be necessary to limit the total pre-tax /concessional contributions under the optimum strategy to the maximum allowed under legislative limits. In these cases, the pension payments have been reduced to ensure that the total pre-tax/concessional contributions are within those legislative limits.
  • It is assumed that you will commence the strategy in this year.
  • Calculations start from today and calculate yearly from this date.
  • Relevant tax scales, offsets*, co-contribution limits and parameters of this nature are assumed to apply for the first full year of the projection. New tax scales, offsets*, co-contribution limits and parameters of this nature are allowed for in future years to the extent they are known at the time. To the extent that such parameters are not known, they are indexed annually at the assumed rate of increase in Average Weekly Ordinary Time Earnings (AWOTE) from the last known set of parameters. * The calculator takes the pension offset and low income tax offset into account, but the mature age worker tax offset is not taken into account.
  • For the purposes of determining co-contribution eligibility, it is assumed that the user has no assessable income plus reportable fringe benefits and reportable employer superannuation contributions other than as shown in this calculator and that the user meets the other eligibility conditions.
  • Age at start of the pension and each 1 July determines the minimum and maximum pension amounts as set down in the relevant legislation. The calculator assumes age at anniversary of commencing date is age at 1 July for this purpose.
  • Pension payments assumed to be paid annually in arrears, expressed as annual payment amounts.
  • Results are based on details input by the user, i.e. from age pension commenced and age permanently retired from the workforce, subject to a maximum of 10 years.
  • Pension payments are rounded to the nearest cent.
  • Projected balance amounts are rounded to the nearest dollar.
  • No allowance has been made for administration fees or any other fees.
  • No other income or sources of income have been considered.
  • Investment earnings are added to your account yearly.
  • Salary sacrifice is an arrangement between you and your employer whereby you choose to give up or 'sacrifice' part of your before tax salary to add it directly into your superannuation account.
  • Total salary sacrifice amounts cannot exceed the gross salary input. The total of salary sacrifice amounts and employer SG contributions cannot exceed $50,000 per annum.
  • Taxable income is the amount of your assessable income less your allowable deductions. It is the amount you pay tax on.
  • Net income received as shown in the 'Before TTR strategy' column of the Results Table is calculated as gross salary after salary sacrifice, less income tax, plus tax offset on this amount.
  • Net income received as shown in the 'Yr 1 Optimum strategy' and 'Your changes’ column of the Results Tables is calculated as gross salary after salary sacrifice, plus pension payments, less income tax, plus tax offset on this combined income, after allowing for that portion of the pension payment which is not subject to tax.
  • Gross salary is indexed with an assumed salary increase rate.
  • No allowance has been made for any social security payments in the illustration of the pension payments, including the Age Pension Bonus.
  • Inflation and investment portfolio earnings (gross and net of tax) are taken to be constant for the whole period at the rates shown below.
  • The default inflation rate (2.50% per annum) and the assumed annual crediting rate (7.5% per annum for the accumulation section which is subject to tax on investment earnings at the superannuation rate of 15% and 8.0% for the Pension section which does not attract tax on investment earnings) have been authorised by the Fund’s actuary. The assumptions used are consistent and reasonable over the long-term for a balanced investment portfolio. Actual crediting rates and inflation will differ from the assumptions used, particularly over short time periods. Crediting rates will be influenced by the investment portfolio chosen. The resultant benefit illustration and the length of time the pension account will last as it is drawn down as a pension can vary widely depending on the assumptions used.
  • The broad asset allocation split between growth and defensive assets of the Balanced Investment Option is 79% growth, 21% defensive.
  • This may differ from the actual asset allocation of your investment option, whether in AustralianSuper or another fund.
  • The assumed future crediting rate is net of investment tax and investment management fees. Click here to view AustralianSuper's investment fees.
  • The member protection fee does not apply to the AustralianSuper Transition to Retirement Pension.
  • The calculator assumes that a minimum balance of $5,000 must be retained in your accumulation account when transferring your benefit to commence a Transition to Retirement pension.
  • You are strongly advised to seek professional financial advice before making a decision to invest in a particular superannuation product or type of superannuation product or to implement a Transition to Retirement option.

Key economic assumptions:

  • The expected long-term crediting rate net of investment related fees for the Balanced Investment Option is 8.00% p.a. not subject to superannuation investment income tax and 7.5% p.a. net of such tax.
  • While the default settings have been approved by the Fund’s actuary, no illustration can be guaranteed. The expected long-term crediting rate may change if you adopt an investment option other than those provided for in this calculator. A more aggressive investment option has higher expected returns but also involves more risk. An investment with more risk will generally have a higher return over the long-term but a greater chance of a negative return over the short-term.
  • The long-term inflation rate default for indexation of annual Pension amounts is set at 2.50%. You can change the indexation rate to a chosen % from those available. An overly conservative assumption may underestimate your need to maintain your purchasing power in this transition period to retirement.
  • The ability to enter your own expected rate of investment return, net of investment fees for the term of the projection, has not been provided. Actual crediting rates and inflation will differ from the assumptions used, particularly over short time periods. The resultant benefit illustration and the length of time this will last as it is drawn down as a pension can vary widely depending on the assumptions used. Over the shorter-term, wider variations in investment performance can occur, particularly for those portfolios with higher allocations to growth assets such as shares and property. These variations can have a material impact on the illustrations produced.
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