What is an investment-linked lifetime annuity

In exchange for a lump sum, you will receive regular income guaranteed for life. The income you receive is linked to the performance of your chosen investment option(s).

Combining an investment-linked lifetime annuity with an account-based pension, and if eligible, the Age Pension, is an optimal way to address inflation and investment risk, and the fear of running out of money. With an ageing population and life expectancies continuing to increase, this is becoming an even more important area for retirees to consider.

Introducing LifeIncome
The most flexible and innovative investment-linked lifetime annuity in the market.

Available exclusively through your financial adviser, LifeIncome is designed to complement other retirement income sources and provide certainty when it comes to meeting your retirement goals.

Below are six core uses of LifeIncome:

• Potentially qualify or bring forward the age to access the Age Pension and ancillary benefits.
• Minimising the impact of an inheritance on your Age Pension benefits and providing regular income guaranteed for life.
• Protecting your spouse / loved one with income for life or a death benefit payment.
• Providing peace of mind and confidence to spend your retirement savings and avoiding ‘regret risk’.
• An additional income layer alongside your account-based pension and Age Pension.
• Investment choice that aligns to your risk profile with the ability to switch at anytime1 as this changes throughout your retirement.

Access more of the Age Pension

LifeIncome is defined as an ‘asset-tested income stream (lifetime)’ product for social security purposes and provides the potential to access some or more of the Age Pension and ancillary benefits such as discounted council rates and cheaper medicine under the Pharmaceutical Benefits Scheme.

Centrelink and the Department of Veterans’ Affairs entitlements are determined using two ‘means’ tests: an assets test and an income test.

Means tested asset value

Under the assets test, only 60% of your investment amount is assessed. From age 84, subject to a minimum of 5 years from the date of investment, only 30% is assessed.

Year 1 means tested income

Only 60% of your LifeIncome annual income is assessed under the income test.

Investment choice and flexibility

Traditional lifetime annuities have only offered a fixed-rate return or an indexed return (e.g. CPI-linked).

Due to LifeIncome’s investment-linked structure, changes in annual income are linked to the investment performance of your chosen investment option(s). The income payments will go up and down with investment performance, and over the longer term income can be expected to grow in excess of inflation, depending on the investment option(s) chosen.

LifeIncome offers a wide range of investment options across all major asset classes including shares, infrastructure and private debt, with the ability for you to switch these investment option(s) at anytime.ᵃ

Working closely with your financial adviser, you can build your own portfolio by investing in single asset investment options or use one of the diversified investment options to suit your desired risk profile. So if your risk profile changes then so too can your investment.

Four portfolio construction ideas

Investment-linked vs. inflation-linked lifetime annuity

The graph below illustrates how an investment-linked lifetime annuity has the potential for annual income to grow over time when compared to an inflation-linked lifetime annuity.

8 key features of LifeIncome

• Immediate investment-linked lifetime annuity - Single or reversionary

• Investment choice across all major asset classes - 29 options with the ability to switch at anytimeᵃ

• Reversionary Beneficiary - Money available to support your spouse or loved oneᵇ between ages of 50 and 95

• LifeBooster - More income sooner in the earlier years when you’re able to enjoy it most

• 0% tax environment - Investment earnings are tax-free - there are tax benefits on income payments too

• Death Benefit available

• LifeIncome Flex - Increase your starting income by choosing a reduction in income when you or your Reversionary Beneficiary pass away

• Dollar-cost averaging - Progressively invest into your chosen investment option(s) over a period of up to 12 months

Footnotes

a) Brief exclusion period applies – refer to the Product Disclosure Statement

b) If you are commencing LifeIncome with superannuation money, you can only nominate your spouse to receive your income after you pass away. If you are commencing LifeIncome with non-superannuation money you can nominate your spouse or any other person such as your child or sibling.

Assumptions for 'Investment-linked vs. inflation-linked lifetime annuity' graph: The graph uses annual historical investment performance and inflation rates commencing in 1993. Annual Income paid to 30 June each year. Investment-linked lifetime annuity: Balanced portfolio returns are actual from 2003 and are constructed using indices and approximate asset allocation from 1993. Fees, expenses and costs of 0.92% + investment management cost of 0.27%. Inflation-linked lifetime annuity: Inflation rate source: Reserve Bank of Australia, Statistical Tables, Consumer Price Inflation – G1, https://www.rba.gov.au/statistics/tables published 2023. Starting income for both annuities $4,000 for illustrative purposes. Starting incomes for both products could start at different levels, depending on the year of commencement. Not indicative of any lifetime annuity solution specifically. Provided as a general example of an investment-linked lifetime annuity only.