This calculator allows you to explore ‘income layering’ - how you can allocate your existing super balance between a Lifetime Pension and an Account-Based Pension. A Lifetime Pension allows you to have an income stream for the rest of your life (and your spouse’s life if you choose). Whereas an Account-Based Pension is invested in your chosen investment options, and you choose how much you want to withdraw from your balance until your funds run out (minimum withdrawal rates apply). Income layering is a common retirement strategy implemented to have multiple sources of income in retirement rather than a single source such as an Account-Based Pension.

Allocating some of your super balance to a Lifetime Pension will have an impact on your overall Asset Allocation. The default Lifetime Pension option in the calculator is ‘Income Certainty’ which is considered a 100% defensive Asset Allocation. By allocating some of your portfolio to a Lifetime Pension (default is 100% defensive assets), you can choose a growth-based investment option within your Account-Based Pension to keep your total Asset Allocation in your target range identified by your investment risk profile. You can also explore a Lifetime Pension with varying levels of Asset Allocations by using the ‘Market-Linked’ Lifetime Pension option in the Settings menu.

Comparison

The calculator provides a comparison between a 0% allocation to a Lifetime Pension and a user input allocation to a Lifetime Pension between 0% and 100% to illustrate the ‘income layering’ impact.

The 0% allocation to a Lifetime Pension, uses a default assumption of illustrating the member’s existing investment options if they access the tool through SuperOnline and a ‘Moderate’ investment option on the Account-Based Pension for public website users.

The user input default is a 35% allocation to an ‘Income Certainty’ Lifetime Pension (100% defensive Asset Allocation) and a 65% allocation to an Account-Based Pension. For the 65% allocation to an Account-Based Pension, the default Asset Allocation is a ‘Growth’ investment option. You can use the investment option dropdowns to explore alternative investment portfolios you wish to model.

The default assumptions noted above are considered reasonable because the Asset Allocation of 53% growth assets on the left-hand side (before income layering) remains consistent with the right-hand side of 54% growth assets (after income layering). This is illustrated on the public version of this calculator.

The Trustee believes it is reasonable that, on average, a 65-year-old member would be invested in the ‘Moderate’ investment option with 100% of their super balance in an Account-Based Pension based on the TelstraSuper MySuper GlidePath. These assumptions are used in the public version of this calculator. TelstraSuper members accessing the calculator through SuperOnline will have their actual investment options illustrated as their current position (before income layering). The Trustee believes this is reasonable as it retains the member’s existing investment choice and illustrates a comparison against a reasonable position. The assumptions are based on the member’s age and need to fund retirement income, including appropriate investment risk exposure.

The calculator also allows you to explore receipt of a Government Age Pension in retirement based on the Income Test and Assets Test and it allows you to alter the settings to explore Government Age Pension scenarios with various asset and income positions.

You can explore your retirement income requirements from both standard living expenses to one-off expenditures and lifestyle goals. The calculator provides links to the Association of Superannuation Funds of Australia (ASFA) retirement standard as the basis of the default starting assumptions for expected retirement income needs.

It shows the probability of achieving your stated retirement income goals to give you an indication of how likely (based on your account information, inputs and a fixed set of assumptions) the projected outcome will occur as well as the projected sources of income in retirement.

This is a stochastic calculator – A stochastic simulation model allows for the uncertain nature of future experience by modelling, in this case 1,000 possible sets of future investment returns and inflation over time and the impact this would have on your retirement outcomes. The results displayed represent the likelihood you choose of a projected outcome from the distribution of possible future outcomes and as such do not represent any one particular outcome and are not a guarantee of a future outcome. The calculator uses assumptions, including for inflation, wage growth and investment returns, that are provided by and recommended by Towers Watson Australia Pty Ltd ABN 45 002 415 349 (WTW). Relying on the recommendation of WTW, the Trustee considers the assumptions are reasonable in relation to the operation of this stochastic calculator because they allow for a reasonable range of potential outcomes when projecting your future financial position.

If you are an existing member of TelstraSuper, logged into SuperOnline and accessing the Lifetime Income Calculator, with your consent, the calculator may pre-fill some inputs to save you time and personalise your experience. We recommend you review these pre-filled inputs to ensure they are an accurate reflection of the circumstances you wish to model. You are able to update these inputs within the calculator screens and settings. The types of data pre-filled varies from member to member depending on the information known or previously inputted.

The pre-filled inputs may include:

• Account balance(s) and relevant investment option allocations
• Your age, gender and marital status
• Partner age, balance(s) and relevant investment option allocations
• Other investment balance(s), other income, investment property balance and rental yield
• Household spending level
• Lifestyle spending goals
• Desired retirement income
• Planned future lump sum contributions / expected inheritance
• Planned future income preferences (Lifetime Pension and Account-Based Pension)

Government Age Pension

By default, the calculator assumes you are eligible for a Government Age Pension and includes it in your retirement income projection. This was considered reasonable to illustrate the potential of Government Age Pension income supplementing income from your superannuation in retirement.

You can also choose not to include a Government Age Pension in the calculation of your retirement income. If you choose to include it, this calculator will produce an estimate based on the Services Australia income and assets tests, our assumptions, and the information you provide. Specific information includes:

• If you choose to include your partner's details in the projection, the calculator applies the Services Australia couple’s income and assets tests and payment rates.
• As a default, the calculator assumes you have $25,000 of personal assets (car, furniture etc.), no investment assets (including no investment property) and no other income. You can input these figures as totals.
• To calculate an estimate of Government Age Pension to include in your retirement income (and that of your partner where applicable), the calculator takes into account:
  • in applying the assets test, the information you input about the value of personal assets, financial investments, investment properties and superannuation accounts, and if you include a Lifetime Pension, then 60% of the investment amount is included as an asset, and 60% of the payments are included as income. From age 84, only 30% of the investment amount is included as an asset.
  • in applying the income test, the investment income deemed to be earned on superannuation accounts and financial assets (excluding an investment property) based on deeming rules, plus projected income on actual rental amount entered for an investment property, plus, if you have modelled a Lifetime Pension, then 60% of the income from that, plus any other income you input.

Please note, the assets test and income test estimates may vary from your actual position when Services Australia applies them because it applies a more detailed calculation. Your personal circumstances may exclude you from eligibility for a Government Age Pension and this may result in a variance from your actual outcome compared to the calculator illustration.

Retirement Planning Certainty

The stochastic simulation model used in this calculator allows for the uncertain nature of future experience by modelling, in this case, 1,000 possible sets of the Consumer Price Index (price inflation) (with a mean of 2.6% pa and standard deviation of 2.2% pa) and wage inflation (with mean of 3.6% pa and standard deviation of 3.2% pa) and investment returns which are updated annually. The most recent figures used in these calculations are from September 2023.

A limitation of a stochastic approach is that you are unable to input a specific assumption for price inflation, wage inflation or investment return amount as the model incorporates 1,000 sets of possible future year-by-year outcomes for these assumptions. The stochastic model produces 1,000 projections of your future financial position. For ease of use, the calculator allows you to choose from three easy to use options regarding retirement planning certainty of your projected future position based on the range of outcomes of price inflation, wage inflation and investment returns.

The three options are: “Very Highly Likely”, “Highly Likely” and “Moderately Likely”. The default likelihood assumption used by the calculator is “Highly likely”, which is an 80% confidence level and is the midpoint of the retirement planning certainty options. The trustee considers this the most reasonable as it illustrates the middle of the alternative options. Should the future price inflation, wage inflation or investment return rates differ significantly from the simulations used, this may result in a variance between the estimate calculated and your actual financial outcome.

Price inflation rates are used to inflate the following legislative factors over the period of the projection:

• Government Age Pension assets test threshold
• Government Age Pension income test threshold
• Deemed income asset threshold
• Transfer Balance Cap (increases only applied in $100,000 increments).

Wage inflation rates are used to inflate the following variables over the period of the projection:

• Your (and your partner’s if applicable) salary
• Your drawdowns / retirement income level
• Your ‘lump sum withdrawals’ in retirement
• The value of your personal assets, investment property value, investment assets and other income
• Dollar based administration fees
• Government Age Pension payment rate

Time Value of Money

The Lifetime Income Calculator presents the results in today’s dollars.

For the purpose of displaying the results in the tool, all future amounts are converted to today’s dollar value, including your projected superannuation balance and the income amounts you will receive in retirement. This means the amounts are adjusted for inflation utilising a stochastic approach.

ASIC’s guidance to calculator providers who provide calculator tools in compliance with ASIC (Superannuation Calculators and Retirement Estimates) Instrument 2022/603 is that projection-based calculators must present future results in today’s dollars. When an amount is expressed in today’s dollars, it means the result has been adjusted for the rising cost of living and increases in living standards. The calculator uses wage inflation as a reasonable basis for estimating the rise in cost of living and increases in living standards.

Showing results in today’s dollars allows you to make a meaningful comparison with current wage levels and prices. If results were shown in “future dollars” instead, they would be larger. “Future dollars” refers to the time value of money where $100 of goods and services in today’s dollars is likely to cost more ten years in the future. For example, if you enter a retirement spending amount of $50,000 pa, the projection assumes that you will increase this level of retirement spending in line with price inflation to keep pace with the rising cost of living and increases in living standards.

Administration Fees

The calculator assumes the following Administration fees apply to the calculation of your retirement balances. The Trustee considers this a reasonable assumption as it expects the majority of users of the calculator will be TelstraSuper members. The administration fees used by the calculator can be changed in the ‘Settings’ page to suit your circumstances.

	Account-Based Pension Account	Accumulation Account (only utilised for balances above the assumed Transfer Balance Cap of $1.9million)
Administration fee ($1 per week)	$52 per annum	$52 per annum
Administration fee (% of balance)	0.17% per annum 0.16% per annum from 1 April 2024	0.17% per annum 0.16% per annum from 1 April 2024
Administration fee cap	$1,752 per annum (includes both rows above) $1,652 per annum from 1 April 2024 (includes both rows above)	$1,752 per annum (includes both rows above) $1,652 per annum from 1 April 2024 (includes both rows above)

Insurance Premiums

The calculator is targeted for users aged 60 and over who are retired or are retiring this year. The Trustee considers it reasonable that these members would not have insurance requirements or require the impact of insurance premiums as a default assumption. Users can update the Administration fees should they wish to model a specific annual insurance amount. However, insurance was considered out of scope for this calculator as the target market are users who are retired or retiring this year. If you have specific insurance needs you wish to model or discuss, we recommend speaking with a financial planner.

Lifetime Pension: The Lifetime Pension illustration has a very simplistic approach. Financial products may exist that have a more extensive range of features and benefits; however, this calculator is not linked to any one specific financial product. As such, the income illustration produced by the calculator is an illustration only and is not a guarantee of return. The features below can be updated by the user to explore various scenarios specifically related to a Lifetime Pension.

Immediate versus Deferred Income – the design of the tool is limited to illustrating Lifetime Pensions with immediate payments only. Should you wish to explore deferred payments in a Lifetime Pension, we recommend you speak with a financial planner who can provide you with specific financial product advice.

Investment Exposure – the design of the tool is limited to projecting only Income Certainty or Market Linked outcomes. Income Certainty is a set payment rate that can be linked with the Consumer Price Index (CPI) or the Reserve Bank of Australia (RBA) cash rate. Market Linked is a payment rate that moves with changes in traditional investment markets such as Australian listed securities. The default assumption is the Income Certainty option as it is a conservative illustration and has a 100% defensive Asset Allocation. Users can still explore Market-Linked options with variable payment rates and varying levels of Asset Allocation mixes.

Indexation – the list of options (no indexation, CPI indexed, RBA cash rate) only applies to the Income Certainty option of the Investment Exposure feature. The default assumption used is CPI indexed as it is reasonable for users to maintain their current lifestyle or a specific lifestyle they wish to model which remains consistent throughout the length of the modelled period.

Investment choice – the list of options (Growth, Balanced, Conservative Balanced, Conservative and Cash) only applies to the Market Linked option of the Investment Exposure feature. The default assumption used is Conservative Balanced as this is a reasonable balance between growth and conservative investments.

Survivor benefit – you can choose to toggle between having a Lifetime Pension revert to your spouse upon your death or not. If no partner is selected, the calculator defaults to a Lifetime Pension that does not revert to your spouse also known as a ‘non-reversionary’ Lifetime Pension.

The default assumption is that 100% of the Lifetime Pension reverts to your spouse upon death. This was considered reasonable to ensure that in a couple scenario, the Lifetime Pension income lasted till the longer of the two spouses.

Maximum withdrawal value illustration – At the time of commencement of your modelled Lifetime Pension, the maximum withdrawal value equals 100% of your investment amount and reduces to zero over the withdrawal period. The withdrawal period is set based on a table of life expectancies published by the Government.

Asset Allocation: Should you choose to model the Market-Linked Lifetime Pension, the following Growth/Defensive Asset Allocations are applied to the Lifetime Pension component when illustrating the Asset Allocation impact from moving funds from an Account-Based Pension to a Lifetime Pension:

Market-Linked Lifetime Pension Option Name	Growth Asset Allocation	Defensive Asset Allocation
Growth	85%	15%
Balanced	65%	35%
Conservative Balanced	50%	50%
Conservative	30%	70%
Cash	0%	100%

 

The following Growth/Defensive Asset Allocations apply to the Account-Based Pension investment risk allocation:

Investment Option Name	Growth Asset Allocation	Defensive Asset Allocation
High Growth	90%	10%
Growth	83%	17%
Balanced	69%	31%
Moderate	53%	47%
Conservative	31%	69%
Cash	0%	100%
Diversified Bonds & Credit	0%	100%
Property	58%	42%
Australian Shares	100%	0%
International Shares	100%	0%

Lifetime Pension indexation approach —The following table provides some details about the projected Lifetime Pension indexation rates used by the stochastic modelling to calculate the projected lifetime income payment rates. Whilst the calculator is product-agnostic, the indexation rates illustrated below have been based on the asset allocations used by Challenger Life Company Limited (ABN 44 072 486 938) (AFSL 234670) (CLC).

The income in your modelled Lifetime Pension is based on pricing tables provided by Challenger Life Company Limited (ABN 44 072 486 938) (AFSL 234670) (CLC) and are only for the purposes of illustration rather than a guarantee of outcome. These pricing tables incorporate the investment returns expected by CLC. Various Lifetime Pension product providers may provide different income quotations depending on market conditions. Users modelling Market-Linked Lifetime Pensions should understand that payment rates may fluctuate based on market conditions for the investment option chosen.

Indexation Rate	Mean of annual indexation	Standard Deviation of annual indexation
Market-Linked Growth	8.36%	14.13%
Market-Linked Balanced	7.52%	10.89%
Market-Linked Conservative Balanced	6.83%	8.45%
Market-Linked Conservative	5.98%	5.45%
Market-Linked Cash	4.32%	1.08%
RBA Cash	4.32%	1.08%
CPI	2.55%	2.25%

 

The illustrations of your projected income layering strategy and Asset Allocation are based on 1,000 sets of simulated rates of investment returns associated with the investment risk level you have selected.

The income in your modelled Lifetime Pension is based on pricing tables provided by Challenger Life Company Limited (ABN 44 072 486 938) (AFSL 234670) (CLC) and are only for the purposes of illustration rather than a guarantee of outcome. These pricing tables incorporate the investment returns expected by CLC. Various Lifetime Pension product providers may provide different income quotations depending on market conditions. Users modelling Market-Linked Lifetime Pensions should understand that payment rates may fluctuate based on market conditions for the investment option chosen.

The following table provides some details about the projected investment returns used by the stochastic modelling to calculate returns for balances held in your modelled Account-Based Pension. Whilst the calculator is product-agnostic, the expected returns illustrated below have been based on advice and modelling received from Towers Watson Australia and the strategic Asset Allocation of TelstraSuper’s investment options. The Trustee considers this a reasonable assumption as it expects the majority of users of the calculator will be TelstraSuper members.

Investment Risk Level	Account Based Pension Account		Accumulation Account
	Mean Annual Return	Standard Deviation of Annual Return	Mean Annual Return	Standard Deviation of Annual Return
High Growth	10.04%	14.15%	8.79%	12.71%
Growth	9.67%	11.82%	8.50%	11.29%
Balanced	9.16%	10.36%	7.86%	9.34%
Moderate	8.36%	8.02%	7.13%	7.12%
Conservative	7.17%	5.28%	6.08%	4.45%
Cash	4.32%	1.08%	3.67%	0.92%
Diversified Bonds and Credit	5.72%	4.49%	4.86%	3.82%
Property	8.36%	10.46%	7.23%	9.05%
Australian Shares	11.04%	19.94%	9.49%	18.01%
International Shares	10.18%	17.74%	9.02%	15.86%
MySuper	*	*	*	*

*The MySuper investment risk option utilises the ‘Growth’ rates of return for users under the age of 50, ‘Balanced’ rates of return for users aged 50 to under 65, ‘Moderate’ rates of return for users aged 65 to under 70 and ‘Conservative’ rates of return for users aged 70 and over.

*The MySuper investment option is not available to already retired users.

• The underlying simulated returns for each investment option for the Account-Based Pensions have been determined based on advice and modelling received from Towers Watson Australia Pty Ltd ABN 45 002 415 349 on 7 September 2023.
• Investment return characteristics shown above are net of applicable investment tax and investment fees (separate to administration fees).
• Past performance is not a reliable indicator of future performance because actual returns may vary significantly from year to year and could be negative in some years, particularly for investment allocations to growth assets, such as shares and property.

The calculator also allows you to model other investment assets, specifically investments held outside of superannuation in Shares/Managed Funds. The summary statistics of the simulated investment returns applicable to these investments are as follows.

Investment type	Mean of annual return	Standard Deviation of annual return
Shares / Managed funds	11.04%	19.94%

 

The Transfer Balance Cap is a cap on the amount of superannuation eligible to be transferred to Account-Based Pensions and Lifetime Pensions in retirement. For the 2023-2024 financial year the Transfer Balance Cap is $1,900,000. This calculator assumes you have not previously set up an Account-Based or Lifetime Pension.

If you have previously set up an Account-Based or Lifetime Pension, this may have a material impact on your Transfer Balance Cap, and your circumstances may vary from the projection provided. We recommend you speak with a financial planner if you have specific Transfer Balance Cap circumstances you wish to discuss. Similarly, the Transfer Balance Cap can be subject to change by the Government in future periods and this may have a material impact on your actual outcome compared to the projected retirement income calculated by the calculator.

A limitation of this calculator is that the maximum combined Account-Based Pension and Lifetime Pension is the current Transfer Balance Cap of $1,900,000. As balances at retirement in excess of the projected Transfer Balance Cap are assumed to remain in a superannuation account similar to the one you held before retirement, the calculator assumes the same fees and returns applied before retirement will be applied to this superannuation account (if applicable) after retirement.

Including your partner (if any) will allow a better estimate of the Government Age Pension to be provided to you as a couple and, as a result, a better estimate of the future drawdowns that you and your partner need to make from super to meet your overall retirement income needs. The calculator does not consider the transitional retirement income needs for couples that retire at different points in time. The desired retirement income goals are related only to the period from your nominated retirement age.

Life expectancy refers to the average number of additional years a person of a given age and sex could be expected to live, assuming current age-sex specific death rates are experienced throughout their lifetime. The life expectancy estimates shown in the calculator are based on population mortality as shown in Australian Life Tables 2015-2017 published by the Australian Government Actuary in December 2019 allowing for the improvement rates in longevity over the past 25 years continuing in the future as set out in those tables. Only male and female sexes will be used for the purposes of calculating life expectancy. If you select ‘Other’, a female life expectancy table will be used. It is a limitation of this calculator, for couple scenarios, for the purposes of providing a Lifetime Pension income estimate, a male / female combination will always be utilised for life expectancy regardless of input.

After allowing for any Government Age Pension, Lifetime Pension, investment property income or other income you are projected to receive in retirement, the calculator determines the drawdowns from each super account and other investments required to achieve the desired target income in retirement. The calculator assumes that you and your partner (if any) drawdown your respective accounts/investments in proportion to your respective balance, subject to minimum drawdown requirements.

This means if your super balance is above the Transfer Balance Cap, your desired target income will be subject to the minimum drawdown requirement, and thereafter the calculator will draw from your pension and accumulation accounts on a proportionate basis. The calculator applies the minimum drawdown rules annually to your drawdowns from your account-based pension which may result in a higher income being paid to you in some years. It does not take into account any tax that may be payable on income received from superannuation before age 60 or capital gains tax that may be applicable on any drawdowns from other investments..

The projection does not consider any other elements that may be important to your retirement income or needs such as insurance, estate planning and tax and is not intended to replace professional financial advice.

The projection does not utilise all of the information we may know about you. With your consent, it may pre-populate some input information on your behalf but it is not a Retirement Estimate for the purposes of regulatory definition and is classified as a Superannuation Calculator.

Furthermore, the calculator does not take into account the following:

• This calculator does not project Defined Benefit entitlements.
• The information and results provided by the calculator take into account certain information you provide to us, however the calculator does not otherwise consider your personal circumstances including your current lifestyle expenses, other financial commitments such as debt or other needs and objectives. When making any financial decisions you should take into account your objectives, financial situation or needs.
• The calculations included in the calculator are based on existing legislation and do not take into account any proposed legislative changes.
• This calculator does not consider changes to spending patterns in retirement.
• This calculator does not consider the sale of other investments to fund retirement that might otherwise delay the need to draw down super.
• This calculator does not consider the impact of any inheritance or other injection of funds in future.
• This calculator limits the user to projecting a Lifetime Pension and Account-Based Pension (combined) to a limit of $1,900,000 in line with the 2023/24 Transfer Balance Cap (TBC) as detailed above. Any amounts in excess of the TBC limit are treated as funds within an Accumulation account.
• For the purposes of projecting lifetime income, this calculator utilises a male and female pricing table in couple scenarios.
• The calculator does not allow for circumstances where a member has a previously established an Account-Based Pension or Lifetime Pension. The calculator provides a simplified age pension estimate, that may vary from your actual position when Services Australia applies the income and assets tests.
• A limitation of a stochastic approach is that you are unable to input a specific assumption for price inflation, wage inflation or investment return amount.
• This calculator does not consider the transitional retirement income needs for couples that retire at different points in time.

The calculator is able to be accessed on both desktop and mobile devices and is best viewed on a desktop computer. If using a device older than 4 years, then the features or functionality of the tool may be limited. Similarly, mobile devices with small screens may result in a sub-optimal user experience. The software used to access the calculator may also impact user experience. Browsers older than 1 version behind the current one may not be able to access the calculator.

The calculator uses relevant Commonwealth laws current as at December 2023 and is subject to change as relevant laws change.