Model My Super information

Model My Super can be used to estimate the level of your (and your partner's) superannuation benefit at retirement. Using Model My Super allows you to:

  • See whether you might have sufficient funds to provide you with your desired standard of living in retirement.
  • See whether you might be in a position to receive government support in the form of the Age Pension, to supplement your own retirement savings.
  • See how different market situations might impact your situation.

It has been designed for Australian conditions only.

Today's dollars

Model My Super will give you an estimate of your benefits and retirement income in today's dollar values. Showing results in today's dollars allows you to consider your future retirement income in the context of today's goods and services and your current standard of living.

The today's dollar amounts have been calculated by deflating future dollar amounts using community wage growth. Wage growth is commonly described as a combination of price inflation plus a margin for improvements in living standards. It is assumed your personal salary growth is the same as community wage growth. Model My Super estimates wage growth by adding a margin to the rate of price inflation shown on the Assumptions panel.

All Model My Super inputs should be in today's dollars.

Current environment

Unless otherwise stated the calculations are based on legislation and rules at 1 July 2020. In particular, Model My Super allows for:

  • Age Pension asset test from 1 January 2017
  • Phased increases to the Superannuation Guarantee rate (to 12% of earnings), including the legislated delay in the phased increases
  • Reduced contribution caps
  • Reduced income threshold for higher contributions tax (Division 293)
  • Restricting after-tax (non-concessional) contributions once super balance exceeds $1.6m
  • Restricting the amount transferred to an account based pension on retirement to $1.6m
  • Re-instatement of the LISC - now called Low Income Superannuation Tax Offset (LISTO)
  • Temporary reduction in minimum draw down factors for account based pensions until 30 June 2021

Model My Super does not allow for:

  • Low Income Tax Offset
  • Senior and Pensioner Tax Offset
  • Any applicable benefit payment tax before age 60
  • Any Centrelink payments apart from the Age Pension (including supplements)

Model My Super assumes that certain legislative thresholds and limits relating to superannuation, tax and social security are increased or indexed in line with wage inflation (unless otherwise stated). The actual rate of increase in these legislative thresholds and limits may vary from the assumed wage inflation rate.

Model My Super will be updated from time to time with changes in the legislative environment.

You are assumed to be exactly your input age; for best results, you should use your nearest age at the current date.

Super balance

Model My Super assumes your super is invested in a standard accumulation fund, and builds up with contributions (from you, your employer and Government contributions) and investment earnings over your working life. Model My Super provides for the deduction of all fees and costs, insurance premiums and taxes from your super balance.

In retirement, your super balance is made up of your account-based pension account and an accumulation account, if applicable (see Retirement income stream).

Retirement income stream

Model My Super allows you to nominate a lump sum amount to withdraw from your super at retirement. It is assumed that on your retirement at or after preservation age, you will convert the rest of your superannuation (up to the transfer balance cap) to an account-based retirement income stream. A retirement income stream enables you to choose how your money is invested (investment option) and how much money to draw down each year, subject to the legislated requirements. There is no tax payable on earnings or money taken out (after age 60) in respect of a superannuation account-based pension.

At retirement, if your super balance exceeds the transfer balance cap (currently $1.6m), only the amount up to the cap will be transferred to a tax free account-based retirement income stream. The excess will remain in your accumulation account, where earnings will be taxed at 15%.

In some circumstances you or your spouse (as applicable) may retire before preservation age. We assume an account-based pension will commence at preservation age, estimated based on the current age you’ve input.

Desired income

Model My Super works by allowing you to nominate a desired level of income in retirement. As a default this is set to 60% of the default salary or if higher, the ASFA Comfortable Standard for a single person of $43,901 (as at October 2020). You can adjust this to an amount based on your actual salary or another amount that suits you by using the slider button on the right of the chart. If you choose a lower level of desired income, your super balance will last longer in your retirement, while choosing a high level of desired income might exhaust your super balance over fewer years (compared to a lower level of desired income). If your selected level of desired income is below the minimum pension drawdown amount as required by superannuation law, then Model My Super may assume a higher level of retirement income than your selected level so as to remain compliant with the legislation.

For assistance in determining a retirement income, use our Retirement Income Budget Planner.

Retirement age

Model My Super assumes you start drawing your super from your retirement age. By default this is age 65, but you can change this on the Retirement Goals panel. If you select a later retirement age, your estimated super balance will last longer in your retirement. If you select an earlier retirement age, you may exhaust your super balance over fewer years. Please note that you cannot select a retirement age below 60.

Age Pension

The Age Pension amount for each year has been calculated based on your super assets and the Centrelink means tests. Model My Super assumes that you are an Australian resident. In the projection, the Age Pension is indexed with wage inflation, while the asset and income test thresholds are indexed in line with price inflation. Model My Super assumes the Age Pension income test to be as it applies to new Age Pensioners from 1 January 2015 and asset test as it applies to all Age Pensioners from 1 January 2017. If you have already retired it is possible that different rules apply to you which would change the results. You should seek financial advice if this applies to you. For the purposes of the means tests, your total financial situation is assumed to be represented by the information you enter on the Other Assets/Income panel and your projected super benefit.

Spouse/partner

Model My Super allows you to enter details for your spouse or partner in order to help you understand your total retirement financial situation. The amount of any Age Pension you receive depends on whether you are single or part of a couple. For simplicity, the values on the Other Assets/Income and Assumptions panels apply to both you and your spouse/partner.

You are both assumed to retire at the same point in time unless you choose a different spouse retirement age on the Retirement Goals panel.

Investment options

Model My Super lets you model the outcome of four different investment options (each with a default assumed investment return). This is done according to the following mix of growth and defensive assets on your estimated super balance at retirement and your estimated retirement income:

  • 1.3% p.a. for Cash (100% defensive assets)
  • 3.0% p.a. for Cautious (32% growth assets / 68% defensive assets)
  • 4.4% p.a. for Balanced Growth (70% growth assets / 30% defensive assets)
  • 4.8% p.a. for Aggressive Growth (88% growth assets / 12% defensive assets)

The default assumed investment returns have been set based on after-tax return assumptions provided by the Scheme's asset consultant Towers Watson Pty Ltd. and are considered reasonable long-term estimates at the current date. The default returns listed above are illustrative only and should not be taken to provide an estimate of the amount of investment earnings you will receive. The rate of investment return is assumed to remain constant over the projection period, except there is an adjustment to allow approximately for the removal of tax during the retirement phase. If you have a short investment time horizon (for example less than 10 years) you may wish to consider current economic conditions in setting the investment return. Your time horizon includes the period your super will last in retirement. You can edit the assumed rate of investment returns on the Assumptions panel.

Assumptions and Stress Test

There are a number of factors that will affect the growth of your super and the retirement income it will provide. Some of the major factors, like investment returns and inflation, will fluctuate over time, but are assumed to lie within certain ranges over the long term.

For simplicity, the values for investment return and inflation remain the same for each year of the projection. The default values for these items can be changed. However, you should note that these default values are considered to be reasonable for the current conditions and are consistent with each other. If you change the default values it is possible that unrealistic scenarios will be projected. The default investment return assumption depends on the investment option you select. Note that Model My Super imposes some limits on the fixed assumptions but the actual experience could be outside these ranges (e.g. investment returns may be negative in some years).

The results given depend on the assumptions input. If these assumptions are not borne out in practice the actual level of your super balance at retirement and your retirement income may be different from that projected. In particular, if you are closer to retirement, short-term negative investment returns could significantly reduce the lump sum you may be able to take at retirement. It is recommended that you get regular updates of the projections and run a number of projections by varying the editable assumptions to illustrate the impact of changes in these assumptions on the projections, for example, the effect of different investment returns.

On the Stress Test panel you can choose to enable a simulated "stress test". With the "stress test" the values used for investment return and wage growth are based on simulations of different future economic scenarios from Mercer's Capital Market Simulator taking into account the underlying assets which your super might be invested in. The values for each of these elements will vary from year-to-year (and may be negative in some years). The values used will also depend on the investment option you select. By clicking on the 'Refresh' button on the Stress Test panel, a new scenario will be chosen and the values will change. At the right of the screen you will see a chart showing the real return under each "stress test" scenario. The real return is the return over and above the level of wage inflation.

There are other assumptions used in the calculations which are set by legislation and cannot be changed (e.g. tax bands and Age Pension means test limits).

Tax File Number

There are significant taxation penalties if you do not provide your Tax File Number to your superannuation fund. Model My Super operates on the basis that you have provided your Tax File Number, and cannot simulate the impact of not doing so.

Salary

Model My Super uses the input salary to calculate Superannuation Guarantee (SG) contributions, eligibility for any Government contributions, and to work out your after-tax income. If you have other income, use the Other Income (Pre-retirement) slider on the Other Assets/Income panel to record the after-tax value of this income.

Contributions

If you are employed, employer contributions are assumed to be at least 9.5% in 2020/2021, increasing annually thereafter in line with the legislated Superannuation Guarantee rate to 12% of salary/Notional Salary by 1 July 2025 or of the Maximum Contribution Base (MCB) (i.e. $57,090 per quarter for the 2020/2021 financial year) if you elect to have your employer contributions limited based on the MCB. MCB is the maximum earnings base on which an employer is required by law to make Superannuation Guarantee contributions for an employee.

If you are self-employed, Model My Super doesn't allow for Superannuation Guarantee or any other employer contributions. You can set salary sacrifice or after-tax contributions to reflect your situation.

Salary sacrifice contributions come from your pre-tax salary, while after-tax contributions are taxed as salary before going to super. Note that salary sacrifice contributions include any contributions for which a tax deduction is claimed. The amounts of salary sacrifice and after-tax contributions are assumed to increase with wage inflation.

By default Model My Super will calculate levels of after-tax and salary sacrifice contributions based on your total voluntary contributions. Alternatively you can set salary sacrifice or after-tax contributions to reflect your situation.

If voluntary contributions are calculated automatically, the change in after-tax income is allocated first to after-tax contributions to maximise the Government co-contribution, then to salary sacrifice contributions to fill up to the standard concessional cap and finally to after-tax contributions to allocate any remaining change in after-tax income.

Consistent with superannuation law, Model My Super operates on the basis that salary sacrifice and after-tax contributions can be made up to age 75 (provided the work test is met for those over age 65) see the Australian Taxation Office (ATO) website at www.ato.gov.au for information about the work test), but there is no age limit on Superannuation Guarantee contributions.

Model My Super allows for excess contributions tax if you input contributions above the legislative limits (which are assumed to be indexed in line with wage inflation). Please refer to the Tax section for more information.

Government co-contribution

Model My Super assumes that you are eligible for the Government co-contribution if your salary is less than the legislated limits (e.g. $54,837 in the financial year 2020/2021) and you make after-tax contributions. For full details of the eligibility criteria for the Government co-contribution, visit the ATO website. For the purposes of calculating the Government co-contribution (if applicable), it has been assumed that your total annual assessable income plus reportable fringe benefits is equal to your current salary plus other pre-retirement income (or half of your other income if you have a spouse) you input. It has also been assumed that the income limits are increased in line with wage inflation.

Low Income Superannuation Tax Offset (LISTO)

Model My Super assumes you are eligible for the LISTO if your salary plus other income (or half of your other income if you have a spouse) is less than $37,000. For full details of eligibility criteria visit the ATO website. The amount of the LISTO (if applicable) is calculated as 15% of your concessional (pre-tax) contributions, subject to a maximum LISTO of $500.

Tax

Employer contributions and salary sacrifice contributions are taxed at 15%. However, significant additional tax applies if your contributions to superannuation exceed certain legislative limits. The limits for the 2020/2021 financial year are:

  • The limit for concessional (employer or salary sacrifice) contributions is $25,000.
  • The limit for non-concessional (after-tax) contributions is $100,000.

Model My Super assumes that these limits are indexed with wage inflation unless otherwise indicated.

If the sum of employer contributions and salary sacrifice contributions exceed the concessional contributions limits above, the excess is taxed at your marginal tax rate (including Medicare levy) and Model My Super deducts this tax from your super balance at the point of the contribution; hence the excess concessional contribution interest charge is not allowed for. also does not allow for the carry forward of unused concessional contributions cap.

Under superannuation law, individuals under age 65 can make up to $300,000 in non-concessional contributions in one year (but the amount of non-concessional contributions that they can make are limited in the following two years so that no more than $300,000 can be contributed for the individual over the three years). Note that Model My Super does not allow for this.

After-tax (non-concessional) contributions below the non-concessional contributions limit are not taxed. After-tax contributions over the limit are taxed at the highest marginal tax rate (plus Medicare levy).

If your super balance exceeds $1.6 million you'll no longer be eligible to make after-tax contributions. If you have elected to make regular after-tax contributions, Model My Super will not apply these contributions from the year after you become ineligible (the contributions will remain in after-tax income). If you elect to make a one-off after tax contribution, but are no longer eligible, this contribution will not be made. Model My Super assumes this limit is indexed in line with price inflation.

Model My Super allows for future application of the Division 293 tax on the contributions of high income earners. Division 293 tax is levied on the "low tax" contributions of members whose "adjusted income" exceeds $250,000. Model My Super assumes your "adjusted income" to be the sum of your salary, other income and concessional contributions. Model My Super does not allow for any existing Division 293 debt that might be held with the ATO and assumes future Division 293 tax is paid from your after-tax income in the year it is incurred. For full details of the Division 293 tax, go to the relevant ATO website page.

Model My Super assumes that the investment return used for the accumulation of the super balance has been reduced for investment tax. Model My Super also assumes that investment earnings on retirement income stream products are not subject to tax. Please note that the investment earnings on any amount exceeding the $1.6m transfer balance cap (which Model My Super assumes is kept in accumulation phase) are taxed at 15%.

Benefit payments are tax-free if you are aged 60 or over. This is reflected in the calculations of Model My Super. Model My Super does not allow for any applicable benefit payment tax for amounts taken under age 60.

Fees and insurance cost

The assumed investment fee and percentage based administration fees are the fees that are expressed as an annual percentage of your super balance. The default value of this item is based on the percentage based administration fees and investment fees (indirect cost ratio) for the selected investment option. Model My Super deducts these amounts from the investment return shown prior to calculating earnings for each year.

The assumed insurance premium and administration fees are deductions expressed as an annual dollar amount, which includes dollar based administration fees and current insurance premiums. Model My Super assumes that these amounts will increase in line with wage inflation and are deducted from your super balance each year until you retire.

Other income

In addition to income from your superannuation and Age Pension, you may have other sources of retirement income. Please enter all values in today’s dollars on the Other Assets/Income panel.

Earnings from any investment assets that you expect to have at retirement will contribute towards your retirement income. Investment assets include items such as bank and building society deposits, cash, shares and term deposits. Model My Super determines the earnings on investment assets by using deeming rules from the Age Pension income test. Model My Super does not allow for the capital of your investment assets to be drawn down.

Other income (e.g. from rentals and hobbies) is assumed to increase with wage inflation. You can enter the post-tax value of other income you may receive using the Other income (in retirement) slider, but do not include income on your investment assets.

Home Loan

Your current home loan amount increases with interest at the input interest rate and is reduced by the annual equivalent of the monthly repayment entered. Your home loan repayment is assumed to be paid regardless of your income, and hence is not shown as impacting your after-tax income on the Your income chart. While Model My Super does not set a lower bound on repayments, it may not be realistic to model a very low repayment amount.

At retirement, you can choose to withdraw a lump sum amount from your super to pay off any remaining home loan. The maximum you can pay off is the lesser of the outstanding loan and your super balance at retirement. If you have a spouse retiring at the same time (or already retired), the home loan repayment is taken proportionally from each partner’s super. If only one spouse is retired the repayment comes from their super.

Life expectancy

The average life expectancy age has been calculated based on the Australian Government Actuary, Australian Life Tables 2015-2017. The calculations allow for future improvements in longevity from your current age, based on historical improvement rates.

Career

Model My Super gives you the option to select up to three career breaks by entering the age you expect to take a break and the number of years you expect to break for. While on a career break, your super balance is projected to continue to grow with investment returns, but Model My Super operates on the basis that you earn no income and make no contributions to super during a career break.

You can also select a career change by entering the age at which you will change salary and the new salary (in today’s dollars). This feature is designed to allow you to model going part time, getting a promotion or changing jobs.

Scope/disclaimer

Model My Super has been prepared for ANZ Staff Superannuation (Australia) Pty Limited (ABN 92 006 680 664, AFSL 238268), as trustee of ANZ Australian Staff Superannuation Scheme (ABN 83 810 127 567) by Mercer Financial Advice (Australia) Pty Ltd ABN 76 153 168 293 (MFAAPL). Any advice contained in Model My Super is of a general nature only, and does not take into account the personal objectives, financial situation, needs and circumstances of any particular individual. Prior to acting on any information contained in this Model, you need to consider its appropriateness taking into account your own objectives, financial situation, needs and circumstances, consider the Product Disclosure Statement for any product you are considering, and seek professional advice from a licensed, or appropriately authorised, financial adviser if you are unsure of what action to take.

Model My Super is not intended as an advertisement for any product issued by ANZ Staff Superannuation (Australia) Pty Limited or any of its related entities.

Copyright 2021 Mercer LLC. All rights reserved.