But moving from earning an income to drawing down on your savings can be a difficult adjustment. Many retirees end up living more frugally than they need to, fearing that  their nest egg won’t last the distance.   

This was a key finding of the Government’s Retirement Income Review released in 2020, which highlighted the need for the superannuation industry to develop products that would give retirees more confidence to spend their savings and live life to the full.  

Against this backdrop, TelstraSuper is excited to have launched our RetireAccess Lifetime Pension which we’ve developed for retirees wanting more income certainty, particularly in these times of high inflation.  

We asked TelstraSuper Financial Planning Head of Advice Delivery, Alla Gorbunova, to shed light on the features and benefits of this product for retirees: 

Alla, what are the key features of the RetireeAccess Lifetime Pension and why is it so special?  

The Lifetime Pension provides a guaranteed, regular, and tax-free income payment in your retirement in exchange for a lump sum purchase price. These payments continue for your lifetime, and you can even opt to have them last for your spouse’s lifetime too. 

Importantly, it comes with an option of being indexed for inflation which protects savings being eroded by higher costs of living. This means that if the cost of living goes up, the amount of income you will receive goes up too. 

We see this product as providing income certainty for our retired members who may otherwise worry about running out of cash as they age. It will allow more retirees to relax and enjoy their retirement, knowing that a portion of their income is guaranteed to last the distance, no matter what happens on investment markets.  

What’s the difference between a lifetime pension and an account-based pension, both of which are offered by TelstraSuper?  

The main difference is the lifetime guarantee.  

TelstraSuper’s RetireAccess Account-Based pension – which many retirees will be familiar with – can also offer regular, flexible and tax-effective income from your superannuation. However, your super remains invested and generates gains and losses according to investment markets. 

The Lifetime Pension is designed to work in conjunction with our RetireAcess Account-Based pension to help retirees receive income for longer with greater certainty. I like to describe it as an extra layer of income protection that is guaranteed. Both products provide income streams.  

A typical scenario could be a retiree investing 30% of their retirement savings into the Lifetime Pension, with the remaining 70% invested in the fund’s account-based pension. Many retirees would also draw a third income from the Government Age Pension.  

So how does the Lifetime Pension work with the Government Age Pension? 

The Lifetime Pension is treated concessionally under the Age Pension Asset Test, which is good news for part pensioners, in particular.  

Only 60% of the amount invested counts towards the Age Pension assets test until age 84, or for a minimum of five years, (after which 30% counts).  So, for example if you were age 67 and put $100,000 into a Lifetime Pension, it only counts as $60,000 under the assets test. 

Under most scenarios, asset tested part-pensioners taking out a Lifetime Pension are likely to see their Age Pension payments increase, and for some retirees it could enable them to qualify for a part-pension and the associated Pensioner Concession Card that comes with a range of benefits. 

What if I need to access money earlier?   

This is a common and understandable concern of many retirees. In contrast to the inflexibility of the old-style guaranteed income products which gave them a bad rap, the RetireAccess Lifetime Pension has built-in features to enable members to retain access to capital over a period, based on their life expectancy.  

If a member needs to withdraw, or if they pass away during their withdrawal period (which is based on their life expectancy), access is available, although the withdrawal amount reduces from the start to the end of the withdrawal period. Having the option to have access to some amount of their capital reduces a common concern for retirees interested in lifetime income products. 

Want to know more? 

TelstraSuper has a dedicated team of specialists on hand to speak to you about the RetireAccess Liftetime Pension. They can answer any questions you may have and walk you through the application process. Call 1300 033 166. You can also read the PDS here. 

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The benefits provided by RetireAccess Lifetime Pension are supported by a life insurance policy issued to Telstra Super Pty Ltd, the trustee of TelstraSuper (“Trustee”) by Challenger Life Company Limited (ABN 44 072 486 938) (AFSL 234670) (“Challenger”). The Trustee, as issuer of the RetireAccess Lifetime Pension product, does not provide any guarantee whatsoever in respect of the product. The guarantee is provided by Challenger Life under the life policy issued to the Trustee. The Trustee relies wholly on Challenger Life to pay your pension and will not pay your pension under a RetireAccess Lifetime Pension if Challenger Life is unable to.

Any general advice on this website has been prepared without taking into account your objectives, financial situation or needs. Before you act on any general advice on this website, you should consider whether it is appropriate to your individual circumstances. Before making any investment decision, you should obtain and read the relevant product disclosure statement which is available on the Website or by calling 1300 033 166 between 8.30 am and 5.30 pm (AEST) Monday to Friday. You may wish to consult an Adviser before you make any decisions relating to your financial affairs. To speak with an Adviser from TelstraSuper Financial Planning call 1300 033 166.