Lifetime Superannuation Model – Assumptions and disclaimer

This Retirement Modeller is provided by CSF Pty Limited (ABN 30 006 169 286, AFSL 246664), the Trustee of the MyLifeMyMoney Superannuation Fund (ABN 50 237 896 957) (the Fund). The Retirement Modeller provides illustrative calculations based on stated assumptions only and is provided in good faith. It has been based on current laws and their interpretation as at July 2018.

The Retirement Modeller is only intended to be a general illustration of your superannuation needs based on known assumptions and limitations. The information that it provides is not a substitute for professional advice from a qualified financial adviser and should not be relied upon as the sole basis upon which to alter your financial arrangements. We recommend that you seek assistance from a qualified financial adviser before making any changes to your financial affairs.

We do not accept any liability, either direct or indirect, arising from any person relying, either wholly or partially, upon any information provided by, resulting from, shown in, or omitted from, the Retirement Modeller. Under no circumstances will the Fund be liable for any loss or damage caused by a user’s reliance on information obtained using this Retirement Modeller.

Disclaimer

This calculator is intended for illustrative purposes only. The information it contains is of a general nature only.
The results provided by the calculator are estimates only and are not guaranteed. Actual outcomes depend on uncertain factors such as salary increases, investment returns and relevant legislation. You should consider regularly updating the projections provided by the calculator.
The calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product. In making any decisions about your superannuation or your retirement you should consider your own objectives, financial situation and needs. You should consider obtaining advice from a licensed financial planner before making any decisions.

Inflation

Wage inflation is assumed to be 3.0% pa, and price inflation is assumed to be 2.5% pa.
You can change the assumed price and wage inflation rates in the “Edit assumptions” section.

Results are in today’s dollars

Results are shown in today's dollars. This means the amounts shown are adjusted for inflation (and so take into account the assumed change in the cost of living between the time of preparing the estimate and the future time).
The assumed rate of wage inflation has been used to discount future amounts to today’s dollars.

Personal income

You are able to enter your current salary on the initial “About you” screen. Your salary is then assumed to increase in line with wage inflation. In any future periods where you enter a period of part-time employment, your salary is reduced pro-rata.
Tax calculations allow for Personal Income Tax rates, the Medicare Levy, the Low Income Tax Offset and the Senior Australian Tax Offset. Threshold and Offset amounts in the first year are based on current rates. Thereafter they are assumed to increase in line with wage inflation.

Employer contributions

The calculator assumes that your employer makes superannuation guarantee contributions on your behalf.
Superannuation guarantee contribution rates are:

Financial year	Rate
01/07/2017	9.50%
01/07/2018	9.50%
01/07/2019	9.50%
01/07/2020	9.50%
01/07/2021	10.00%
01/07/2022	10.50%
01/07/2023	11.00%
01/07/2024	11.50%
01/07/2025	12.00%

Voluntary member contributions

The calculator enables you to enter regular voluntary concessional or non-concessional contributions. Voluntary contribution amounts are assumed to increase in each year in line with your salary. In any periods of part-time work, these contributions are assumed to decrease pro-rata.
The calculator also enables you to make a one-off non-concessional contribution. The amount you enters as a one-off contribution is assumed to be fixed, and is not indexed.
Concessional contributions up to $25,000 pa are taxed at 15%. Concessional contributions in excess of the contribution threshold are subject to additional tax. This is levied in the income tax environment, and so has no impact on the estimates in this calculator; however it would increase the amount of income tax you would have to pay.
High income earners (from 1 July 2017, those who earn over $250,000 p.a.) are subject to additional tax on concessional contributions. These individuals will pay an additional 15% contributions tax on contributions relating to income above the $250,000 threshold. The calculator assumes that this additional tax is deducted from the superannuation balance; however there is also the option to pay this tax directly to the ATO.
Non-concessional contributions up to $100,000 pa are not taxed. You can increase this amount in any one year under the “bring-forward” arrangements. The additional amount which can be contributed depends on your account balance and your age:

• If your balance is under $1.4m you are able to “bring-forward” this and the next two years of contributions, and so can contribute $300,000.
• If your balance is between $1.4m and $1.5m you are able to “bring-forward” this and the following year of contributions, and so can contribute $200,000.
• If your balance is between $1.5m and $1.6m (or if you are between 65 and 74 years old) you are not able to bring forward any future year’s contributions, your non-concessional contribution cap is equal to the annual cap of $100,000.
• If your balance is over $1.6m (or if you are 75 years old or older) your non-concessional contributions cap is $0.

The non-concessional cap under these “bring-forward” arrangements also represents the total amount of eligible non-concessional contributions within the bring-forward period.
The calculator enables you to enter both regular annual non-concessional contributions and a one-off lump sum non-concessional contribution. If in any year the combination of these would exceed the relevant non-concessional contribution cap, the calculator will limit the contributions to the cap amount; if this occurs you will receive a message.
The Concessional and Non-Concessional contribution thresholds are indexed in line with the assumed rate of wage inflation.

Co-Contribution

In each projection year, your eligibility for a Government Co-Contribution is assessed based on your salary and non-concessional contributions.
The Co-Contribution thresholds and maximum amount are indexed in line with wage inflation.

LISTO

In each projection year, your eligibility for a Low Income Superannuation Tax Offset is assessed based on your salary and concessional contributions.
The LISTO income threshold and maximum benefit are indexed in line with wage inflation.

Investment earnings

The default investment return assumptions are:

	Pension phase return (before tax)	Accumulation phase return (after tax)
Conservative	5.00%	4.50%
Moderate	5.50%	5.00%
Balanced	6.00%	5.50%
Growth	6.50%	6.00%
High growth	7.00%	6.50%

These are the return objectives over a rolling 10 year period for Catholic Super investment options.
Investment earnings in Accumulation and Transition to Retirement Income Stream accounts are taxed. Investment earnings in post-retirement pension accounts are tax-free. The above returns are before the asset-based investment fee.

Administration fees and insurance premiums

The default administration fees and insurance premiums are based on our super (accumulation) fees:

Administration Fee (per annum)	$93.60 pa
Asset-based Administration Fee	0.18 % pa of the account balance
Insurance premiums	nil

These are the ”Medium fee level” rates in the ASIC MoneySmart superannuation calculator.
The dollar-based administration fee and the annual insurance premium increase in line wage inflation.

Life expectancy

The calculator provides an indicator of your life expectancy. The life expectancies allow for future mortality improvements. They were derived based on the medium mortality rate assumptions in the Australian Bureau of Statistics in "Population Projections 2006-2101".

Age pension

The calculator estimates your age pension entitlement.
The full rate of age pension and associated supplements are initially set to the current rates; detailed on https://www.humanservices.gov.au/individuals/services/centrelink/age-pension. The full rate of payment is indexed each year in line with wage inflation.
Age pension eligibility is subject to an asset test and an income test. Asset and income test thresholds are initially set to their current levels, and are indexed each year in line with price inflation.
The asset test is based on the accrued balance of superannuation assets and other assets.
Centrelink assess income for income test purposes in a number of ways. For example, any actual rent received on investment properties is included in assessable income. However interest or dividend income received on financial investments is not included directly. Rather “deemed” income is calculated on financial investments and used for the age pension income test.
For the purpose of this calculator, this distinction is not made. Rather, deemed income is calculated on superannuation and all assets outside of superannuation, and age pension eligibility is calculated based on this deemed income.

Transition to retirement

The transition to retirement calculation:

• assumes that you continue working at the same rate
• assumes that you make additional salary sacrifice contributions and draw a pension such that your net income remains constant
• calculates the contribution and drawing level which maximises the benefit within the superannuation environment.

Transfer balance cap

The transfer balance cap restricts the amount that can be transferred into an account-based pension. At 1 July 2017 the cap is $1.6m and will increase in $100,000 increments in line with price inflation. If at the time of retirement your projected account balance exceeds the (indexed) transfer balance cap, the maximum possible amount will be transferred into an account-based pension and any excess balance will be retained in an accumulation account.

Drawings

The drawings from superannuation in retirement are calculated as: Target income (which you are able to specify) less other income (which you are able to specify) less any age pension amounts (as calculated by the calculator).
Where the transfer balance cap is exceeded at the time of retirement, in retirement you will have both an accumulation account and a pension account. The minimum required amount will be drawn from the pension account and any further income required to attain your target income will be drawn from their accumulation account.

Minimum drawings

There are statutory minimum superannuation drawings in both the TTR phase and in retirement (once funds have been converted to the pension phase). For the purpose of this projection, this minimum is effectively ignored in the TTR phase, on the basis that any excess drawings could be re-contributed as non-concessional contributions.
Minimum drawing requirements are also be ignored in the retirement phase. Though the minimum drawing amount would have to be withdrawn from superannuation, if they were not required to be spent to meet your target income, the funds would still be available, for example in a bank account. Seen from the perspective of retirement funding, and without the complication of including an account external to superannuation, it may be preferable then to ignore the minimum drawing levels.

Legislative assumptions

A number of assumptions in this calculator are prescribed by legislation. These assumptions include: superannuation guarantee contribution rates; the tax arrangements on superannuation contributions, investment earnings and drawings; co-contributions; age pension payment rates and thresholds; income tax rates; and transition to retirement arrangements.
Where there is relevant legislation, the assumptions made in this calculator reflect current legislative arrangements. One uncertainty regarding future superannuation entitlement relates to possible future legislative changes.
Although some future changes in the legislation relating to superannuation are likely, it is not possible to know what these changes may be. Where there is relevant legislation, current legislative arrangements therefore represent the most reasonable basis for estimating future superannuation entitlement.
Updates to legislative assumptions are made as soon as practicable after such changes are announced. The calculator is based on legislative arrangements as at May 2018.

Limitations

This calculator attempts to include the most significant features of the superannuation environment, and to do so in an accurate manner. However a calculator such as this is not able to address all facets of superannuation The most significant limitations are:

• The calculator performs a “deterministic” projection.
  This means that the assumptions such as investment returns are assumed to be constant every year, at the rates indicated above. The actual investment returns will vary from year to year. More aggressive investment options, with higher expected returns, would be expected to exhibit a more significant range of outcomes. The calculator does not show the range of possible outcomes.
  In this calculator, selecting a more aggressive investment option will present a more favourable outcome. However there is also likely to be more uncertainty attached to this outcome. You should consider this carefully before selecting an investment option.
• The calculator does not include the capacity to make “catch-up” concessional contributions.
• Deemed income on all other assets
  As described above, when assessing age pension eligibility, the calculator considers deemed income on all other assets.
  If you have significant rental income from investment properties this may not be appropriate, and more personal financial advice should be obtained.