• RetireSmart pension

  • RetireSmart's pre-mixed investments are focused on growing your savings to give you a regular, sustainable income throughout your retirement

    What is RetireSmart?

    Our RetireSmart account based pension is for members who prefer the convenience and freedom of not having to choose and manage their own investment mix. It operates on a pre-set investment model that's designed to generate a consistent stream of income during retirement, with the goal of making your account balance last as long as possible.

    Even so, you should be aware there is no guarantee that your savings and income will last for a lifetime. This will depend on a range of factors, including your account starting balance, how investment markets perform, the withdrawals you make and your life expectancy.

  • Supplementing your income in retirement

    Many people will find that their income in retirement will comprise both a pension from their super savings as well as income from the part Age Pension. In fact 75% of all retirees currently receive some level of Age Pension income*. 

    Centrelink takes into account your age and residence when determining your eligibility for the Age Pension. In addition to these requirements, two means tests are also applied.

      *Department of Human Services statistic for 2014/2015

  • Key features of RetireSmart

    Investments

    Your investment strategy is pre-mixed for you and designed to generate income and capital growth.

    Pension income

    You can nominate your annual income (as a percentage of your account balance), subject to an age-based minimum. The maximum annual pension payable is 20% of your account balance (10% if you have a transition to retirement pension). Income will be withdrawn from your Cash bucket.

    Flexibility

    You'll be able to make lump sum withdrawals at any time, unless you have a transition to retirement pension. The minimum amount for each withdrawal is $5,000.

    Payment frequency

    You can choose to receive weekly, fortnightly, monthly, quarterly, twice-yearly or yearly pension payments.

    Minimum investment

    $100,000 initial investment. If your investment falls below $5,000, your full account balance will be paid out in the next pension run.

  • How does RetireSmart work?

    • The two-bucket investment approach


      RetireSmart two bucket investment strategy

      The underlying strategy for our RetireSmart account based pension uses what we call a 'two-bucket' investment model. This is because your account balance is separated into two distinct investment buckets:

      1. Growth bucket—invested predominantly in growth assets such as shares, property, infrastructure and bonds that generate both capital growth and income in the form of dividends, rent and interest. This income is then distributed to the Cash bucket to support your pension payments.
      2. Cash bucket—invested wholly in Australian cash and term deposits with the aim of insulating your pension payments during market downturns. This bucket is used as the source of your regular pension payments.


      For more details about RetireSmart pension investments, download the Your investment options pension fact sheet (PDF). 

      How much money is kept in each bucket?

      When you start your RetireSmart pension, your Cash bucket will initially contain two times your nominated annual pension income. The remaining start-up balance will be invested in your Growth bucket.

      The balance in your Cash bucket will reduce as your pension payments and any lump sum withdrawals come out. Therefore, it will automatically be topped up on a regular basis from your Growth bucket.

      Quarterly transfers of income will be made from the Growth bucket to the Cash bucket. Annual transfers from Growth to Cash will also occur if any excess capital gains are achieved—this helps provide you with extra income certainty and in effect locks in some capital gains for a rainy day. There will also be a top-up from Growth if the balance in Cash should fall below six months’ worth of pension payments.

      If you decide to make a lump sum withdrawal and there's not enough money in your Cash bucket to leave a minimum balance of two years’ worth of pension payments, any shortfall will be withdrawn from your Growth bucket.

      If the balance in your Cash bucket should rise to above three times your nominated annual pension income, then the excess money will be transferred back into the Growth bucket.

      As a rule, the underlying assets (e.g. shares) will remain in the Growth bucket i.e. they are not normally sold to allow pension payments to be made. This minimises the risk of selling growth assets when markets are falling and therefore locking in investment losses.

  • Example of how RetireSmart works

    • Amy's RetireSmart pension exampleOn retiring at age 65, Amy purchases an Australian Catholic Superannuation RetireSmart pension with a starting balance of $300,000. She chooses to receive an annual income of $24,000 (or 8% of her account balance). The RetireSmart pension will supplement her entitlement to the government Age Pension. (If Amy hadn't nominated an annual payment amount for her RetireSmart pension, she would receive the legislated minimum amount of 5% of her account balance–$15,000–based on her age.)

      See the table below for details of how Amy's money is invested between the RetireSmart Growth and Cash buckets.

      Amy's RetireSmart pension account  Growth bucket Cash bucket 
      Opening balance ($300,000) $252,000 $48,000
      Pension payments* N/A -$24,000
      Earnings# (Net of costs^) $52,500 $1,400
      End of year balance $304,500 $25,400
      Rebalancing: Transfer any dividend earnings (and excess returns) from Growth bucket to Cash bucket -$43,200 $43,200
      New end of year balance $261,300 $68,600

      Total account balance at end of Year 1 = $329,900

      After 12 months invested in RetireSmart, Amy’s account balance grows to $329,900—higher than her initial starting balance, even after her income payments ($24,000) come out, due to favourable returns. All of her income payments are withdrawn from her Cash bucket only, without affecting the assets in her Growth bucket.

      *Assumes that only the scheduled pension payments are made and no further withdrawals are made by the member.
      #Earnings shown are for illustrative purposes only and have been calculated using RetireSmart’s strategic asset allocations and 2013 calendar year asset class market returns. Please note that past performance is not a reliable indicator of future performance. 
      ^Costs include the annual administration fee of $78 and RetireSmart's annual investment fee of 0.72% (comprising 0.63% for the Growth component and 0.09% for the Cash component)..
      In this example, investment returns were sufficiently high that Amy’s total account balance at the end of the financial year was higher than her initial investment. However, Amy’s account balance will reduce in some years when impacted by negative investment returns. In addition, the fact that the minimum pension she must take will increase as she ages means that Amy’s account balance will reduce over time. The information provided is of a general nature only, and does not take into account your personal objectives, financial situation or needs. Before making a decision to invest in RetireSmart, you should read the Retirement Product Disclosure Statement and seek independent financial advice.
       
       

  • Are there any risks investing in RetireSmart?

    • One of the major risks with any type of investment is that it may fluctuate in value from year to year and may produce negative returns over the short-term, or even over periods greater than one year.

      While investments in the RetireSmart Growth bucket may fall in value over shorter or longer-term periods, you won't necessarily have to sell these investments, and therefore incur a loss, in order to continue receiving your regular pension payments. The likelihood of having to do this is reduced as your RetireSmart pension payments are made from the Cash bucket. However, if the balance in your Cash bucket reduces to zero and you need to rely on the sale of investments in the Growth bucket to fund your ongoing pension payments (or a lump sum withdrawal), then you may suffer an actual capital loss if investment markets fall.

      Before making a decision, be better informed about the potential risks of investing in an account based pension.

  • Need more information?

    For more detail on Australian Catholic Superannuation's RetireSmart pension, download and read the Retirement Product Disclosure Statement (PDF).

    If you have questions about our RetireSmart pension or require specific advice on your own situation, you could benefit from meeting with a financial planner at Australian Catholic Superannuation. They'll be able to help you decide if an account based pension is best suited to your financial needs. You can call us on 1300 658 776 for more information or to make an appointment for an initial obligation-free discussion.

    Learn more about our financial advice services.

    If you've read the Retirement Product Disclosure Statement and are ready to start your RetireSmart pension, download the RetireSmart account based pension member application form (PDF), attach the necessary identification documents, sign and send it to us.

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