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The Australian Taxation Office issues regular updates on superannuation matters. These have been aggregated for 2023 and are listed here.

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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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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.

Have you read your SMSF financial statements recently? The financial statements for most SMSFs are prepared 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 be to assess the retirement obligations of the fund’s members. This would have each member set a retirement objective and then assess the corresponding fund liability.

• This would set a benchmark for the fund’s assets.
• There would be an incentive for members to engage when comparing their account balances to the fund’s liabilities.
• It would be a useful measure for financial planners to provide advice to members and trustees.
• Any changes to the retirement objectives of members could be explicitly measured and disclosed.
• The fund’s investment returns could be benchmarked annually against the assumptions used to determine the value of accrued liabilities.

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

Furthermore by adding this value to the notes in the financial accounts, it would provide guidance to both trustees and members alike.

For an immediate assessment of your fund’s liability for its retirement obligations, 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.