Helping your retired clients lead a fulfilling retirement

Anxiety about money can take the pleasure out of retirement – even for those who have no reason to worry. Here’s how to help provide comfort and confidence to your clients who are in retirement or close to it.

The Federal Government’s Retirement Income Covenant found that the average retiree passes away with 90% of the assets they had accrued at retirement¹. Some retirees do this to bequeath a large inheritance, but for others it’s because they live in fear of running out of money. They penny pinch to preserve their capital – causing unnecessary stress and limiting their options in retirement.

What if you could help your clients enjoy their hard-earned savings sustainably – without worry?

Income for life 

Providing comfort and confidence for retirees is what our Lifetime Income account is all about. It's a hybrid solution that offers the flexibility and complete investment control that clients are familiar with in an account based pension with the added certainty, similar to an annuity, of an income stream that will never run out for the life of the retiree and their spouse.

The account is topped up with an Annual Bonus so that it does not run out. The Annual Bonus works a bit like life insurance in reverse. Instead of paying annual premiums that rise each year in exchange for a lump sum paid to your client’s family at the end of their life, such as with life insurance, they are paid an annual bonus that rises each year they live. In exchange for receiving an annual bonus the account holder leaves behind some money after they pass away or exit the account.

The account provides a higher rate of income than a typical account based pension² and the annual bonus is backed by a large, reputable insurance company. You can choose to invest the portfolio in any way you wish – giving you the freedom to invest in line with your client’s needs and values.
 

Accumulate more, with asset test advantages 

While retirees fear running out of money, pre-retirees often worry they won’t accumulate enough in time. Our Lifetime Super account helps ease this fear by allowing clients to plan and invest for retirement earlier, creating better long-term benefits.

The Lifetime Super account operates as any standard super account, with the same contribution rules. But for a small fee of 0.1%, the client is able to access the MyNorth Lifetime environment in pre-retirement, building a future lifetime income stream and enabling potential future age pension asset test discounts. The client’s future age pension asset test eligibility is calculated on their account contributions – not on its growth. It assumes account growth using the current deeming rate of 2.25%³.

The client’s asset test is 60% of the purchase amount. And if there is a withdrawal from the account before the asset test, it could reduce the asset test amount further. This could allow the client to be eligible for some age pension.

The Lifetime Super account allows you to choose an investment strategy that aligns with your client’s objectives, goals and values. You’re also free to change and rebalance the portfolio as circumstances change.
 

Maximise benefits

Finally, what if your client wants to receive regular cash flow and enjoy a more favourable asset test outcome? For that we recommend the Deferred Lifetime Income account.

This tax-free accumulation account⁴ acts as a hybrid account. Like the Lifetime Income account, it provides an annual bonus, giving the client a guaranteed lifetime income, underwritten by a large, reputable insurer. It also provides the same asset test benefits as the Lifetime Super account – giving them a greater asset test advantage. It also provides the same freedom and flexibility regarding investment choice and strategy.
 

¹ Treasury Department, Australian Government. Retirement Income Covenant Position Paper, 19 July 2021.

² Rates as at March 2023.

³ This deeming rate is current as of time of publishing but is set to change in 2024.

⁴ Only investments in retirement phase are tax free.