The modeller is not a recommendation and is not intended to be an exact figure. It is intended to assist you in assessing the effects your contributions and investment choices may have on your retirement outcome. The estimate may change in the future as it does not take into account any changes in the cost of living between the time of the preparation of the estimate and the future time or future changes to laws after the date of preparation of these assumptions. Do not rely on this calculator to make decisions about your retirement. You should consider your own needs, financial situation and investment objectives and may wish to get advice from a licensed financial adviser before making any financial decisions.
Average weekly ordinary time earnings (referred to in these assumptions as wage inflation) of 3.2% p.a. has been assumed. Target income is also assumed to increase at this rate, and future account balances are discounted to present values at this rate. This is intended to reflect both CPI increases and general standard-of-living increases. This has the effect of preserving an individual's relative standard of living.
The user's salary is assumed to increase in line with wage inflation. In any future periods where the user has a period of part-time employment, their salary is reduced pro-rata.
Tax calculations allow for Personal Income Tax rates, the Medicare Levy, the Low Income Tax Offset and the Senior Australian Tax Offset. It does not take into account the Medicare surcharge or any HECS/HELP debt. Threshold and Offset amounts in the first year are based on current rates. Thereafter they are indexed in line with wage inflation.
The user is assumed to receive superannuation guarantee contributions. The assumed rates of contribution are:
|01/07/2014 to 30/6/2021||9.50%|
|01/07/2025 and onwards||12.00%|
Superannuation guarantee contributions are subject to the maximum super contribution base, which is $55,270 per quarter for 2019-2020. This threshold is indexed annually in line with average weekly ordinary time earnings (AWOTE).
Regular concessional (before tax) or non-concessional (after tax) contributions entered by the user are assumed to increase in each year in line with the user's salary. In any periods of part-time work, the user's contributions are assumed to decrease pro-rata. Concessional contributions are assumed to be spread evenly across the year.
The amount of a one-off non-concessional contribution entered by the user is assumed to be fixed, and is not indexed.
Concessional contributions up to the concessional contributions cap are generally taxed at 15% on contribution to the superannuation environment. Non-concessional contributions up to the non-concessional contributions cap are not subject to tax on contribution to the superannuation environment. Where a concessional or non-concessional contribution exceeds the corresponding legislated contribution limit, the contributions are subject to additional tax levied in the personal income tax environment.
For the 2019-2020 financial year the general concessional cap is $25,000.
Note, to the extent that the combined amount of your income and concessional contributions for a particular financial year exceeds $250,000, concessional contributions are assumed to be subject to tax at 30% on contribution to the superannuation environment.
For the 2019-2020 financial year the non-concessional cap is 4 times the general concessional cap, being $100,000. This can be increased by up to $300,000 under the 'bring-forward' rules. The additional amount which can be contributed depends on your account balance and your age:
- If your balance is under $1.4m you are able to 'bring-forward' this and the next two years of contributions, and so can contribute $300,000.
- If your balance is between $1.4m and $1.5m you are able to 'bring-forward' this and the following year of contributions, and so can contribute $200,000.
- If your balance is between $1.5m and $1.6m (or if you are between 65 and 74 years old) you are not able to bring forward any future year’s contributions, your non-concessional contribution cap is equal to the annual cap of $100,000.
- If your balance is over $1.6m (or if you are 75 years old or older) your non-concessional contributions cap is $0.
The non-concessional cap under these 'bring-forward' arrangements also represents the total amount of eligible non-concessional contributions within the bring-forward period.
The calculator enables you to enter both regular annual non-concessional contributions and a one-off lump sum non-concessional contribution. If in any year the combination of these would exceed the relevant non-concessional contribution cap, the calculator will limit the contributions to the cap amount; if this occurs you will receive a message.
The concessional and non-concessional contribution limits are indexed in line with AWOTE.
In each projection year, the user's eligibility for a Government co-contribution is assessed based on their salary (note, the calculator does not take into account any reportable fringe benefits that may affect your eligibility for a co-contribution) and non-concessional contributions. A co-contribution of up to $500 is made to the superannuation account if you make non-concessional contributions and your salary is below the lower income threshold and is pro-rated if your salary is between the lower income threshold and the upper income threshold.
The co-contribution income thresholds are indexed in accordance with wage inflation. For the current co-contribution income thresholds, visit the Australian Tax Office (ATO) at www.ato.gov.au/rates
Based on the investment mix selected, the member's superannuation and pension accounts are assumed to earn anticipated investment returns of between 2.7% and 5.0% per annum before fees and tax. Earnings are based on the investment returns used in ASIC's Superannuation Calculator available at www.moneysmart.gov.au, as at July 2019, which are set out in the table below. Past performance is not an indicator of future performance. Earnings in the superannuation account are assumed to be taxed at the relevant rate (based on the percentage of funds invested in shares, and allowing for dividend imputation and the capital gains tax concession if applicable). Earnings in the pension account are assumed to be tax-free. Investment earnings are assumed to be credited continuously to the fund.
|Pension phase return (before tax)||Accumulation phase return (after tax)||Asset split|
|Cash||2.7%||2.295%||100% in deposits with Australian deposit-taking institutions|
|Moderate||4.4%||4.035%||Around 50% in shares and property, 50% in cash or fixed interest|
|Growth||5.0%||4.71%||Around 85% in shares and property, 15% in cash or fixed interest|
Fees and insurance premiums
Fees are based on fees for the Rest Super product with the Core Strategy option and are assumed to be as follows:
|Administration fee (per annum)||$67.60|
|Administration fee (% of account balance at the end of the month)||0.1% pa|
|Contribution fee (% of contribution)||0.00%|
|Insurance premiums (per annum)||$0.00|
|Adviser service fee (% of assets)||0.00%|
|Investment fee* (% of assets)|
*Current as at July 2019
Fees are assumed to be tax-deductible in the fund. For more information about fees please refer to the relevant Product Disclosure Statement at www.rest.com.au/pds
Dollar fees are assumed to increase in line with the assumed level of wage inflation. Other fees are assumed to remain constant in percentage terms over the projection period.
From July 2019, the Protecting Your Super legislation introduced a 3% fee cap for super balances of less than $6,000. This is ignored for the purposes of this calculator.
Life expectancies allow for future mortality improvements. They were derived based on the medium mortality rate assumptions in the Australian Bureau of Statistics in 'Population Projections, Australia, 2006 to 2101'.
Current age pension thresholds and rates of payment are allowed for, based on the Single/Couple and Homeowner status of the user. If couple is selected it is assumed that your partner has the same income and assets as you. Thresholds and rates of payment are indexed in line with wage inflation. It is assumed you meet the qualification requirements for the age pension under the social security legislation.
The age pension is subject to an asset test and an income test. The user enters their Assets outside super which is used for the Age pension asset test. The projection assumes that in retirement funds are placed in an Account-based pension. The Age pension income test is therefore calculated on the basis of both: drawings from superannuation, less the Account-based pension deductible amount; and deemed income on Assets outside super. The Assets outside super and Additional income are assumed to increase each year at the same rate as the assumed wage inflation.
The Department of Human Services rate estimator lets you estimate your payment rate of age pension , based on your current or proposed circumstances. It does not work out if you will be eligible for a payment. To use the rate estimator go to humanservices.gov.au/estimators
Transfer balance cap
The transfer balance cap restricts the amount that can be transferred into an account-based pension. At 1 July 2017 the cap is $1.6m and will increase in $100,000 increments in line with price inflation. If at the time of retirement your projected account balance exceeds the (indexed) transfer balance cap, the maximum possible amount will be transferred into an account-based pension and any excess balance will be retained in an accumulation account.
The drawings from superannuation in retirement are calculated as: Required income less other income (as entered by the user) less any age pension amounts (as calculated by the program).
Where the transfer balance cap is exceeded at the time of retirement, in retirement you will have both an accumulation account and a pension account. The minimum required amount will be drawn from the pension account and any further income required to attain your target income will be drawn from their accumulation account.
There are statutory minimum superannuation drawings in retirement (once funds have been converted to the pension phase). For the purpose of this projection, this minimum is ignored in the retirement phase. This is because if the minimum drawings were not required to be spent to meet your target income, they would still be available to you outside of the superannuation environment in, for example, a bank account.
Online calculators let you explore your potential retirement income in more detail. They let you personalise the estimate, and show you how you can improve your retirement income. Don’t make any changes to your retirement savings arrangements based on this estimate. Before you make changes, you should get further information or advice.
Transition to Retirement (TTR)
Transition to retirement optimisation: This assumes that the user continues working, makes additional salary sacrifice contributions and draws a pension such that their net income remains constant. It calculates the contribution and drawing level which maximises the benefit within the superannuation environment.
Last updated: July 2019