Your retirement income is likely to come from a range of areas, and will usually consist of:
- Centrelink Age Pension – this is a great base for most people to build the rest of their retirement income on
- Superannuation savings – this can be a very tax-effective way of receiving an income in retirement
- Other sources – such as investments, savings held outside your super or some form of paid work (if you are transitioning into retirement)
Regardless of where it comes from, the most important thing to consider is whether you will have enough to provide you with the income you want for the rest of your life.
Transition to retirement (TTR)
A transition to retirement strategy may be suitable for people who are eligible to access their super and want to cut back their working hours, but not retire completely. It can be a great way to supplement your income while you wind back gradually to explore new interests and ease into retirement.
Alternatively it can be used to accelerate your super savings while you continue to work when used in conjunction with salary sacrifice contributions.
A transition to retirement income stream product, such as VicSuper Flexible Income with Transition to Retirement feature, can offer great financial and tax benefits.
Features to note include:
- Investment earnings on Flexible Income accounts with a TTR feature will be taxed concessionally (15%) until you reach age 65 or notify us that you satisfy a relevant condition of release (such as retirement).
- A transfer balance cap is a lifetime limit on the total amount of superannuation that can be transferred into retirement phase income streams. This cap does not apply to transfers into accounts with the TTR feature but applies once the TTR feature is no longer applicable, for example, on retirement.
Refer to the VicSuper Flexible Income PDS (PDF) for details.
If you are considering investing in a VicSuper Flexible Income account with the TTR feature (or are already invested in one), we recommend you call our Member Centre or talk to one of our financial planners to find out how these changes could impact your retirement plans.
Benefits of a transition to retirement strategy
- Boost your super savings through extra salary sacrifice contributions while maintaining your take home income.
- Alternatively, cut back your working hours but not your take-home income.
- Earn tax-free income from your retirement income if you're aged 60 or over.
Is it right for me?
This strategy must be tailored to an individual's circumstances, so it's important you get expert advice from one of our financial planners.
However, as a guide it may be best suited to those who:
- have a taxable income in excess of $19,400 pa and have a marginal tax rate of 19% or more
- want to reduce their working hours but maintain their standard of living; or
- want to continue working full-time and boost their super before retirement without affecting their take home pay.
VicSuper Flexible Income with Transition to Retirement feature is designed specifically for people who want to transition to retirement.
You can receive up to 10% of your super savings per year as a regular income stream while you continue to work.
At a glance
VicSuper Flexible Income with Transition to Retirement feature
A transition strategy suitable for people who are currently over preservation age and still working, but want to supplement their income from their super savings Minimum investment
Select an income amount between the minimum and maximum limit
Use our calculator
Twice monthly, monthly, quarterly, half-yearly or yearly
Choose from nine investment options
You are unable to make personal withdrawals except in limited circumstances
VicSuper Flexible income
VicSuper Flexible Income provides you with a cost competitive way to get a regular income from your super savings.
Why VicSuper Flexible Income?
- A regular income – Receive a regular income, paid into your bank account.
- Competitive fee structure – No entry or exit fees, and no commissions paid to financial planners.
- Invest your savings – Earn investment returns even while you're receiving your income payments.
- Tax benefits – Once you're age 60, income payments are tax-free.
- Access to your account 24/7 – VicSuper MembersOnline is a secure online service provided as part of your membership where you can monitor and manage your account, anywhere and at any time.
- Expert advice – Access to personal advice.
At a glance
VicSuper Flexible Income Suitable for people who are retired or eligible to access their super and want to receive a regular income from their super savings Minimum investment $10,000 Transfer balance cap There is a general transfer balance cap of $1.7 million, which is a lifetime limit on the total amount of superannuation that can be transferred into retirement phase income streams.
From 1 July 2021, all Individuals will have a personal transfer balance cap between $1.6 million and $1.7 million. Individuals who start their first retirement phase income stream on or after 1 July 2021 will have a personal transfer balance cap of $1.7 million.
It’s important to note that everyone will have their own personal transfer balance cap. You will need to visit ato.gov.au to find out what cap applies to you. This cap applies to all retirement phase income stream accounts you may have, except Transition to Retirement income streams. If you exceed the transfer balance cap, the Australian Taxation Office (ATO) will require you to remove the excess from your income stream(s) and additional tax may apply.
Payment amount Select an income amount, subject to Government minimum payment requirements.
Use our calculator
Payment frequency Twice monthly, monthly, quarterly, half-yearly or yearly Investment options Choose from nine investment options Partial withdrawals You can make partial withdrawals at any time (except from money invested in a Term Deposit before its maturity date). Minimum of $1,000 per withdrawal.
For details on withdrawals, changing your payments, changing your investment options and nominating beneficiaries, see Managing your VicSuper Flexible Income.
Competitive fee structure
Fee type Amount Administration fee1,2 Account-keeping fee $1.50 per week plus
Administration fee 0.22% pa
Investment fee2,3 From 0.00% to 0.32% (estimated) depending on your investment option. Indirect cost ratio2,3 From 0.00% to 0.54% (estimated) depending on your investment option. Contribution fee Nil Investment switching fee Nil Withdrawal fee Nil
1The administration fee and account-keeping fee are deducted from your account at the end of each month in arrears. These fees are capped at a combined total of $125 per month per account.
2 If your account balance for for a VicSuper product is less than $6,000 at the end of our income year, the total combined amount of administration fees, investment fees and indirect costs charged to you is capped at 3% of your account balance. Any amount charged in excess of that cap must be refunded.
3 The investment fee and ICR shown are based on the estimated investment related costs that these investment options incurred in the Victorian Superannuation Fund for the 12 months ended 30 June 2020. Actual investment fees and indirect costs may vary and will depend on the actual fees, costs and taxes incurred by us in managing the investment option(s). The figures disclosed are based on historical information provided to us by the former trustee of the Victorian Superannuation Fund. It is anticipated that the investment fees and ICRs incurred in the 2020/21 financial year will change as a result of the transfer of the products to the Fund and a restructure of the underlying investment portfolios and associated reduced fee and cost structures. They cannot be estimated precisely in advance. If it becomes apparent that actual costs will differ materially the estimates will be updated. These fees are not deducted directly from your account.
VicSuper offers two Guaranteed Income account options1:
- Guaranteed Income for Life, which pays an income for the rest of your life, and
- Guaranteed Fixed Term Income, which pays an income for your chosen term (from 1-40 years).
One, or both, of these accounts may suit you, depending on your circumstances.
How do they work?
In return for your initial lump sum investment, a Guaranteed Income account provides you a guaranteed regular income1 for life or for a fixed investment term that you choose.
At a glance
Guaranteed Income for Life Guaranteed Fixed Term Income Suitable for members aged 60 or above who are looking to convert part of their super into a guaranteed income stream for the rest of their lives.
Suitable for members aged 60 or above who are looking to convert part of their super into a guaranteed income stream for a set period of time.
The amount of your regular income payments is determined at the time you invest in the account. It will depend on the initial investment, prevailing interest rates, the account options you choose and your life expectancy (and the life expectancy of any reversionary) at the time you invest in the account.
The amount of your regular income payments is determined at the time you invest in the account and will depend on the initial investment, prevailing interest rates, the account options you choose, and the investment term selected.
Monthly, quarterly, half-yearly or yearly, unless you choose to invest in a one year Guaranteed Fixed Term Income account, in which case you must receive payments monthly, quarterly or half-yearly.
Your lifetime or the lifetime of you and your reversionary.
1 to 40 years - depending on the term you select.
The withdrawal period is determined when you open your account and is based on your life expectancy.
1 to 40 years - depending on the term you select.
Download PDS Download PDS
The income you receive is determined when you first invest, and is then paid over your nominated term – regardless of market ups and downs. And, if you have a Guaranteed Fixed Term Income Account, you can elect to receive some or all of your initial investment amount in your regular payments, or as a lump sum payment at the end of the term.
Our Guaranteed Income accounts also have the following features2:
- ability to choose an option that protects you from increases in the cost of living (for fixed terms of two years or more)
- option to nominate a partner to receive any remaining benefits in your account as an ongoing income upon your death
- ability to withdraw fully within the withdrawal period (which is based on your life expectancy when you open your account) from a Guaranteed Income for Life account
- ability to withdraw fully until the end of the investment term from a Guaranteed Fixed Term Income account
- a known estate value via a guaranteed death benefit
- the cost of administering the account is included when the payment rate is first determined, so there are no ongoing direct fees or charges
- retirement income payments are tax-free
2Please refer to the Guaranteed Income Product Disclosure Statement for more detailed information regarding the Guaranteed Income offer.
Fees and charges
Fee type How and when paid Amount
Guaranteed Income for Life
Guaranteed Fixed Term Income Investment fee Not applicable Nil1 Nil1 Administration fee
Included in the calculation of the income payment (not deducted directly from an account of yours or from your income payments).
0.15% pa of initial investment
0.20% pa of initial investment
0.20% pa of reducing initial investment
Not applicable Nil
Not applicable Nil
Relating to all members investing in the product.
Not applicable No advice fee is charged for providing general and simple advice limited to your account.
No advice fee is charged for providing general and simple advice limited to your account.
Other fees and costs2
Additional fees may be paid to a financial planner. The fees will depend on the complexity of the advice you are seeking. If you obtain complex financial advice from a planner in our financial planning business, you will be informed of the cost before you proceed. If you are issued with a statement of advice, it will contain details of the fees, which may be deducted from your account when the advice is received (or you may need to pay the fee directly).
Indirect cost ratio
Not applicable Nil1
1Challenger Life and the Trustee do not impose additional fees or expense recoveries in relation to your account. In setting the amount of regular payments, Challenger Life takes into account various assumptions about longevity and investment returns as well as the cost of providing the product to our members.
2For further details on fees that apply to Guaranteed Income members refer to the Guaranteed Income PDS.
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