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Connectingthedots is pleased is offer a sample “Retirement Income Covenant” for use by SMSFs and superannuation trustees alike. We’re making setting retirement objectives seamless.

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A clean template of this document is also available by email here.

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The Australian Taxation Office issues regular updates on superannuation matters. These have been aggregated for 2021 and are listed here.

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Life tenant factors for 2015-17 Australian Life Tables are available here using a discount rate of 5% per annum. It is noted that these factors have increased materially at advanced ages since the previous version.

The table above is available for online purchase at $99 +GST here.

For queries on the use and appropriateness of these factors for a stated purpose, please contact us directly.

Alternatively, you could use our online calculator here.

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How much superannuation is enough? For individuals considering a lifetime pension, the correct value is a function of both age and gender. Our actuaries have recently calibrated a complete table of targets required to produce a retirement income of $65,000 p.a.

For example, a retirement income of $65,000 p.a. (indexed) for a 70 year old female is valued at:
$802,776 (on average)

A complete table of targets for all ages is reproduced below:

There are a range of alternate targets applicable depending on other factors such as guaranteed periods, reversionary elements or personal health circumstances. These can be sourced via our online calculator here.

How do your annual SMSF accounts compare? The financial statements for most SMSFs are prepared as special purpose accounts and on a cash basis with no consideration for the retirement obligations of the fund’s members. This is less than helpful when say:

• you have less than $200,000 and are mid-career, or
• you are a couple approaching retirement with a combined balance of $500,000 or
• you are a young adult with no savings, or
• you have entered retirement phase with assets of around $650,000

An alternative to cash accounting would include some recognition of the retirement obligations of each SMSF. This is achieved by having each member formally set a retirement objective and including this in the notes to the accounts. This gives rise to a value of accrued benefits over the lifetime of all members relative to their objectives.

• This would clearly indicate whether the fund is on target to meet its members’ retirement objectives.
• There would be a greater incentive for all individuals to engage with their retirement objectives and savings.
• It could be referred to by financial planners as a guide for providing further advice to members and trustees.
• Any changes to the retirement objectives of the members could be explicitly measured and reported to both members and Government.
• It would be cost neutral to Government and potentially offer savings in the longer term with a greater emphasis on long-term investment strategies.
• The fund’s investment returns could be benchmarked annually against the assumptions used to determine the value of accrued benefits.

The concept of accrued benefits is already well established internationally within both accounting and actuarial standards for superannuation and pension funds.

Also by including this value in the notes to the financial accounts as a discretionary liability, it would remain off the balance sheet and yet would provide added guidance to both trustees and members alike.

For an immediate assessment of your accrued benefits, please try our online calculator below:

Valuation of Accrued Benefits - Calculator

Alternatively, you can download our submission to Treasury’s, “Review of Retirement Incomes in 2020,” – here.

We are pleased to announce the launch of our actuarial certificate service to superannuation trustees, auditors and accountants via the BGL platform. Through the use of API technology, all account balances and transactions are compiled in real time and presented as charts instantly. No data entry and no waiting.

All our certificates are reviewed by our inhouse actuary and all users can review their fund balances across the current tax year in real time as follows:

Then the results are presented immediately as a daily percentage chart allocated between taxed and untaxed balances together with the overall Tax Exempt Percentage for the year. A sample is as follows:

More information can be found about us on BGL’s help page here.

We hope that you like our approach to providing timely and relevant actuarial certificates.

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If you would like to take advantage of this service, please defer to BGL and their SimpleFund360 platform.