| Strategy ID |
Section |
Strategy |
Description |
| 97 |
Retirement income |
Guaranteed lifetime income stream (super) |
Due to low rates of return on annuities, this strategy is only optimal under limited conditions. These are: |
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- An annuity increases the expected Centrelink entitlement. This only occurs if the income test is the dominant test, and the net assessable income is less than what the deemed income would be for an account based pension.
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- Client/s have indicated certainty of income is a critical objective (see objectives).
|
| 98 |
Retirement income |
Withdraw lump sum from pension |
This can occur due to one of the following reasons: |
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- To meet lifestyle requirements.
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- Monies are required to meet competing objectives such as debt reduction.
|
| 99 |
Retirement income |
Transition to retirement to increase cashflow |
This can occur under one of the following conditions: |
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- To meet lifestyle requirements.
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- Monies are required to meet competing objectives such as debt reduction.
|
| 100 |
Retirement income |
Increase your pension payments |
This can occur under one of the following conditions: |
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- To meet lifestyle requirements.
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- Monies are required to meet competing objectives such as debt reduction.
|
| 101 |
Retirement income |
Commute your pension |
This can occur under one of the following conditions: |
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- There are other competing objectives to satisfy.
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- Client/s have a problem with the Transfer Balance Cap
|
| 102 |
Retirement income |
Commence an account based pension |
Due to favourable tax treatment it is generally always optimal to commence a pension when eligible provided funds are not required for other competing objectives. |
| 103 |
Retirement income |
Redeem annuity |
This would typically only occur if: |
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- Additional expected return from an alternative product such as an Account Based Pension, justify the break costs and the client has specified that certainty of income is not an objective.
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- There is no adverse Centrelink consequences.
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- Funds are requried to meet another specified objective.
|
| 104 |
Retirement income |
Guaranteed term annuity (non-super) |
Due to low rates of return on annuities, this strategy is only optimal under limited conditions. These are: |
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|
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- An annuity increases the expected Centrelink entitlement. This only occurs if the income test is the dominant test, and the net assessable income is less than what the deemed income would be for an account based pension.
|
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- Client/s have indicated certainty of income is a critical objective (see objectives).
|
| 105 |
Retirement income |
Transition to retirement and salary sacrifice |
Strategy can be optimal when it generates tax savings. |
| 106 |
Retirement income |
Withdraw a lump sum from pension and re-contribute to spouse |
This strategy is optimal when an increase in Centrelink can be achieved. |
| 107 |
Retirement income |
Commute existing pension, consolidate super, commence new pension |
Once the appropriate pension account has been determined for each client/s, it is generally optimal to run 1 account only to minimise fees. However, it can still be optimal to maintain seperate pension accounts under the following conditions: |
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- The existing pension is pre-deeming (e.g. 01/01/2015), and therefore has preferential Centrelink treatment.
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- We don’t want to dilute the existing tax free %. Running 2 pension accounts allows a client/s to draw down more aggressively from the account with the higher taxable portion (post 60). This has no immediate adverse tax consequences but reduces potential death tax.
|
| 108 |
Retirement income |
Guaranteed lifetime annuity (non-super) |
Due to low rates of return on annuities, this strategy is only optimal under limited conditions. These are: |
| |
|
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- An annuity increases the expected Centrelink entitlement. This only occurs if the income test is the dominant test, and the net assessable income is less than what the deemed income would be for an account based pension.
|
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|
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- Client/s have indicated certainty of income is a critical objective (see objectives).
|
| 109 |
Retirement income |
Decrease your pension payments |
This occurs when the additional cashflow is not required to fund lifestyle requirements. |
| 110 |
Retirement income |
Guaranteed term income stream (super) |
Due to low rates of return on annuities, this strategy is only optimal under limited conditions. These are: |
| |
|
|
- An annuity increases the expected Centrelink entitlement. This only occurs if the income test is the dominant test, and the net assessable income is less than what the deemed income would be for an account based pension.
|
| |
|
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- Client/s have indicated certainty of income is a critical objective (see objectives).
|
| 111 |
Retirement income |
Retain an existing pension strategy |
This occurs when comparing retirement products is in scope, but the preferred product is the existing product (see retirement product comparison step). |
| 112 |
Retirement income |
Public sector superannuation scheme – Full lump sum (no pension) |
When presented with a defined benefit, PrimeSolve runs a seperate optimisation model for all available options (lump sum, income, combination). We then run a simulation with 1000 plus trials across each option to determine the probability of funds lasting under each option. If certainty of income is not a stated objective, the recommended option will be the option that has the highest probability of funds lasting. If certainty of income is a stated objective, the optimisation engine may choose to implement an option that has a pension component to avoid penalty (see penalty on objectives not met). |
| 113 |
Retirement income |
Public sector superannuation scheme – Full indexed pension (no lump sum) |
When presented with a defined benefit, PrimeSolve runs a seperate optimisation model for all available options (lump sum, income, combination). We then run a simulation with 1000 plus trials across each option to determine the probability of funds lasting under each option. If certainty of income is not a stated objective, the recommended option will be the option that has the highest probability of funds lasting. If certainty of income is a stated objective, the optimisation engine may choose to implement an option that has a pension component to avoid penalty (see penalty on objectives not met). |
| 114 |
Retirement income |
Public sector superannuation scheme – 50% indexed pension, 50% lump sum |
When presented with a defined benefit, PrimeSolve runs a seperate optimisation model for all available options (lump sum, income, combination). We then run a simulation with 1000 plus trials across each option to determine the probability of funds lasting under each option. If certainty of income is not a stated objective, the recommended option will be the option that has the highest probability of funds lasting. If certainty of income is a stated objective, the optimisation engine may choose to implement an option that has a pension component to avoid penalty (see penalty on objectives not met). |
| 115 |
Retirement income |
Commonwealth Superannuation Scheme – Full lump sum |
When presented with a defined benefit, PrimeSolve runs a seperate optimisation model for all available options (lump sum, income, combination). We then run a simulation with 1000 plus trials across each option to determine the probability of funds lasting under each option. If certainty of income is not a stated objective, the recommended option will be the option that has the highest probability of funds lasting. If certainty of income is a stated objective, the optimisation engine may choose to implement an option that has a pension component to avoid penalty (see penalty on objectives not met). |
| 116 |
Retirement income |
Commonwealth Superannuation Scheme – Maximum pension, lump sum productivity |
When presented with a defined benefit, PrimeSolve runs a seperate optimisation model for all available options (lump sum, income, combination). We then run a simulation with 1000 plus trials across each option to determine the probability of funds lasting under each option. If certainty of income is not a stated objective, the recommended option will be the option that has the highest probability of funds lasting. If certainty of income is a stated objective, the optimisation engine may choose to implement an option that has a pension component to avoid penalty (see penalty on objectives not met). |
| 117 |
Retirement income |
Commonwealth Superannuation Scheme – Standard pension, lump sum of member and productivity |
When presented with a defined benefit, PrimeSolve runs a seperate optimisation model for all available options (lump sum, income, combination). We then run a simulation with 1000 plus trials across each option to determine the probability of funds lasting under each option. If certainty of income is not a stated objective, the recommended option will be the option that has the highest probability of funds lasting. If certainty of income is a stated objective, the optimisation engine may choose to implement an option that has a pension component to avoid penalty (see penalty on objectives not met). |
| 118 |
Retirement income |
Commonwealth Superannuation Scheme – Preserve entire benefit |
When presented with a defined benefit, PrimeSolve runs a seperate optimisation model for all available options (lump sum, income, combination). We then run a simulation with 1000 plus trials across each option to determine the probability of funds lasting under each option. If certainty of income is not a stated objective, the recommended option will be the option that has the highest probability of funds lasting. If certainty of income is a stated objective, the optimisation engine may choose to implement an option that has a pension component to avoid penalty (see penalty on objectives not met). |
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