Introducing the MyNorth Deferred Lifetime Income account
One of an award-winning1 suite of three solutions that financial advisers can use to help clients retire comfortably, confident they’ll have a lifetime of retirement income.
A MyNorth Deferred Lifetime Income account can be used in accumulation and may provide enhanced tax, transfer balance and Centrelink benefits; and provides greater opportunities for long-term client engagement with significantly better retirement outcomes2.
Benefits for you
More flexibility to manage your clients' goals in retirement.
Freedom to invest from North’s extensive Pension and Super menu.
Support their ongoing retirement needs.
Benefits for your clients
Available to clients over 60 who’ve met a full condition of release.
Up to the maximum annual withdrawal rate.
Discount of 40% on the asset test.
Guaranteed by a top insurer.
Couples Option allows for a nominated reversionary spouse.
Optional Death and Exit Benefit.
Become a MyNorth Lifetime Master
How the MyNorth Deferred Lifetime Income account works
A MyNorth Deferred Lifetime Income account can be opened from age 60, once a member meets a full condition of release. It’s the first pension account in Australia that accepts contributions.
You can set up the account using any investment options from North’s extensive Pension and Super menu. You can defer the income stream up to age 100 and along the way your client can access withdrawals up to the maximum commutation rate.
When your client is ready to commence an income, they can easily transition into a MyNorth Lifetime Income account.
Four ways to use a MyNorth Deferred Lifetime Income account
Clients can draw income from another product, and then convert this account to a Lifetime Income account when the other account is depleted. This overcomes the traditional issue with deferred annuities of a mismatch in timing or income levels.
Clients can contribute to the account and access commutations, while all investment earnings are tax-free.
A modest sum can be invested and compounded tax-free, with no need to draw income until needed.
You can make lump-sum withdrawals and contributions to achieve a number of desirable outcomes such as: equalising super balances between spouses, maximising pension balances under a legislated cap, increasing eligibility for social security, saving income tax while still working.
Case study
Jinoo is 60 years of age, single, and recently left his old employer for a new full-time role.
Strategy
- $190,000 (50%) of his super into a Deferred Lifetime Income account
- $190,000 (50%) of his super remains in standard super
- Split contributions evenly between both accounts
- 70% growth investment profile, generating 5.31% pa net of investment earnings and platform administration fees
Goals
- Wants to retire age 70
- Wants regular income in retirement that will not run out, as well as money aside for discretionary spending
Situation
- Met a condition of release by ceasing his previous employment arrangement on or after the age of 60
- Earns $100,000 gross salary pa, indexed to wage inflation
- Has $380,000 in super and his employer contributes 12%
Jinoo’s pre-retirement
By the age of 70, Jinoo’s standard super balance has compounded annually by the investment earnings and contributions he has made and is worth $298,796, of which the full value will be assessed by Centrelink for the Age Pension asset test.
At this time, his Deferred Lifetime Income balance has also compounded annually by the same investment earnings and contributions and is worth $320,424; approximately $22,000 more than his standard super balance because he does not pay investment earnings tax and receives a guaranteed annual bonus each year in his Deferred Lifetime Income account.
Additionally, Deferred Lifetime Income accounts accrue a purchase amount equal to all contributions less commutations (not including investment earnings). A further 40% discount is applied to the purchase amount, which is then assessed by Centrelink for the age pension asset test. As such, only $118,758 (37% of his actual account balance) is assessable from Jinoo’s Deferred Lifetime Income account at age 70.
Jinoo’s retirement
Jinoo retires at age 70, is a homeowner with an additional $100,000 in other assets. He wants to receive $60,000 income in today’s dollar’s indexed to CPI. He rolls his Deferred Lifetime Income account into a Lifetime Income account and rolls his standard super into an Account Based Pension.
Assumptions
- All projections assume 2.3% CPI rate of inflation, and 3% wage inflation (AWOTE)
- All income, capital and age pension projections are in today’s dollars indexed to CPI
- Investment Earnings Tax is 15% (of a standard super account)
- Concessional Contributions Tax is 15%
- All concessional contributions are within concessional cap
- 20 September 2022 age pension rates, deeming rates and thresholds applied (subject to inflation)
- Lifetime Account annually pay a $91 account fee + a 10bp lifetime fee
- Standard Super and Account Based Pensions annually pay a $91 account fee
- All investment earnings are assumed to be net of fees
Jinoo's retirement income
Because of Jinoo’s reduced Centrelink assets test, he immediately receives over $10,000 in Age Pension in his first year of retirement, where he would otherwise receive $0 in the absence of MyNorth Lifetime.
Jinoo is also able to sustain his $60,000 income goal for an additional 5 years due to the increased Age Pension and MyNorth Lifetime income he receives each year. When his Account Based Pension finally depletes at age 95, his MyNorth Lifetime Income account continues to pay income for the remainder of his life, preventing him from ever relying on the Age Pension alone.
100% Standard Super and Account Based Pension
Jinoo’s Strategy
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What you need to know
The information on this page has been provided by NMMT Limited ABN 42 058 835 573, AFSL 234653 (NMMT) and is general in nature. It’s for professional adviser use only and must not be distributed or made available to retail clients. Any taxation and Centrelink information is not intended to be personal advice and should not be relied on as such. A person should consider whether this information is appropriate for them before making any decisions. It’s important a person considers their circumstances and reads the relevant product disclosure statement and target market determination, available from northonline.com.au or by contacting the North Service Centre on 1800 667 841, before deciding what’s right for them.
You can read the Financial Services Guide online for more information, including the fees and benefits that companies related to NMMT, N.M.
Superannuation Pty Limited ABN 31 008 428 322, AFSL 234654 (N.M. Super) and their representatives may receive in relation to products and services provided. You can also ask us for a hard copy. MyNorth is a trademark registered to NMMT. MyNorth Lifetime is a part of MyNorth Super and Pension and is issued by N. M. Superannuation Proprietary Limited (ABN 31 008 428 322, AFSL 234654 (NM Super) as trustee of the Wealth Personal Superannuation and Pension Fund (the Fund) ABN 92 381 911 598
1 Deferred Lifetime Investment Linked Winner, and Innovation Winner, Plan for Life Excellence Awards, 2022, Chant West's Best Fund: Innovation award Winner, 2023, Pension Fund Design and Reform Award winner at World Pension Summit 2023.
2 Compared to typical account-based pension income rates