Retirement Income Allocated Pension
Information sheet
SUPE R ANNUATION
This information sheet is intended to provide an overview of the key features and benefits of the Retirement Income
Allocated Pension. It is not intended to be a substitute for the Product Information Booklet (PIB) which includes
all the information you should consider before making a decision. You should read the PIB and consider seeking
professional legal, taxation or personal financial advice before commencing an allocated pension. The PIB is
available at www.gesb.com.au/brochures or by contacting your Member Services Centre on 13 43 72.
Options in retirement
Most people have access to income from a number
of different sources when they retire. Income can come
from super, investments, part-time employment or the
Age Pension.
When you have satisfied a condition of release, you have
a number of choices on what to do with your super.
This includes leaving your super where it is, or investing
in a retirement income stream. GESB manages different
retirement products for current and former WA public
sector employees. Depending on your situation, you can
choose to either:
•Keep it in super - for those who have not decided
what to do with their benefit, but want access to
lump-sum withdrawals
• Open an allocated pension - for those who have
retired and want a regular income stream, or those
who want to continue working under a Transition to
Retirement strategy
Allocated pension
GESB’s Retirement Income Allocated Pension is an account
based income stream which provides you with a regular
income that is flexible and tax-effective. There are a variety
of benefits to investing in an allocated pension:
• Choose how much income you’re paid each year –
subject to limits set by the Commonwealth government,
and your account balance
•Make lump-sum1 withdrawals of $1,000 or more
at any time
• Receive payments directly into your nominated bank
account either monthly, quarterly or annually (this
frequency can be changed on your request)
• You have the flexibility to choose what investment plan
your money is invested in
• The investment earnings in your Retirement Income
Allocated Pension account are tax exempt which makes
it a tax-effective investment
• Your pension payments and lump-sum withdrawals are
tax free if you are aged 60 or over
• An allocated pension may have less of an impact on
your Centrelink entitlements than other investment
alternatives as special conditions apply (but those
conditions could change)
• You have convenient access to your account – either
online through Member Online, or by calling your
Member Services Centre
Pension payments and withdrawals
Minimum annual pension payments
Subject to the payment limits set by the Commonwealth
government, you can choose your level of income.
The annual minimum pension limits are determined by
multiplying your Retirement Income Allocated Pension
account balance at the start of the financial year (or on
joining in your first year) by the appropriate percentage
for your age. This also applies on a pro-rata basis if you
are in your first year of joining.
Age
Percent of account balance (%)
Under 65
4
65-74
5
75-79
6
80-84
7
85-89
9
90-94
11
95 and over
14
Choosing your pension amount
In determining how much you want to receive, you may
want to think about:
• Your lifestyle and annual expenses
• Other income you may have
• Your partner’s income
• How long you want your allocated pension to last
You can change your pension amount (subject to limits) at
any time to meet your changing circumstances.
1 Lump-sum withdrawals are not applicable for Transition to Retirement members.
Pension payment considerations
How long will your allocated pension last?
• You must draw the minimum pension payment amount
on at least an annual basis
This will depend on:
• If you open your Retirement Income Allocated Pension
account part way through the financial year, your
minimum pension amount is a pro-rata of the
annual minimum
• The annual minimum pension amount is calculated on
your balance as at 1 July each year. We will advise you of
your new minimum pension amount each year, and you
may need to adjust your payment to make sure it is at or
above this minimum
• If you open an account after 1 June, you don’t have to
draw a pension until the next financial year
• If you want to make a lump-sum withdrawal, you must
have received at least the pro-rata minimum pension
payment for that financial year
• If you commenced your pension under Transition to
Retirement rules, you cannot withdraw more than 10%
of your account balance (at the start of each financial
year) in any one year, unless you have satisfied a
condition of release with a nil cashing restriction
(for example turning 65, or permanently retiring after
reaching your Commonwealth preservation age2)
How you receive your pension income
Just like your salary when you were working, your pension
income will be paid into your nominated bank account.
Payments must be made into an account in your name and
cannot be made to a credit card, third party, business or
overseas account.
When pension payments are made
You can choose to have your pension payments made
monthly, quarterly or annually and you may change your
payment frequency at any time. Pensions are paid on or
before the 15th day of the month(s) you select for payment.
Withdrawing additional money
The Retirement Income Allocated Pension allows you to
withdraw additional money from your account. Whatever
the reason, you may withdraw a lump sum of $1,000 or
more provided that at least $1,000 remains in your account,
unless your account is to be closed.
• How much money you initially invest
• The investment returns of your chosen
investment plan(s)
• The pension amount you choose
• Any lump-sum withdrawals you make
• Fees and costs paid
Your balance reduces each time you receive a regular
pension payment or a one-off lump-sum withdrawal from
your account. You will continue to receive payments until
there is no money left in your account. There is a risk this
will run out before you die. A useful resource is the
MoneySmart ‘Retirement planner’ available at
www.moneysmart.gov.au.
Fees
The fees and costs for allocated pensions are often
complex, but our fees are below the industry median3.
Our one fee covers investment costs and administration
costs. It’s built into the value of each investment plan before
it reaches your account, so no other fees will be deducted
from your balance.
The cost of managing different investments varies, so the
total fee will differ for each investment plan. For example,
investment costs for the Cash plan or Conservative plan will
be lower than those for the Growth plan because growth
assets are typically more complex and expensive to manage.
The table overleaf contains GESB’s estimate for the Indirect
Cost Ratio (ICR) for each Retirement Income Allocated
Pension investment plan.
The ICR includes all of the investment costs and any
additional underlying costs relating to your investment.
It is an annual percentage fee which covers the cost of
managing the fund’s investments including a proportion
allocated to risk reserves. Retirement Income Allocated
Pension’s ICR is not fixed, and is reviewed periodically and
adjusted to take into account prevailing investment
expenses. The actual ICR can only be determined at the
end of each financial year.
If you are aged under 60, please keep in mind that any
lump-sum withdrawals may affect the amount of tax
payable on your pension payments. Generally, under
Transition to Retirement rules, lump-sum withdrawals are
not permissible.
2 Your Commonwealth preservation age is dependent on your date of birth. For more information on your Commonwealth preservation
age, read the ‘Accessing your super’ brochure available at www.gesb.com.au/brochures.
3 SuperRatings Smart database as at 31 March 2015.
2
Estimated
performance fee4
(% pa)
Estimated total
fee (ICR) (% pa)
Administration fee
(% pa)
Estimated
cost for managing
your investment
(% pa)
Included in the
estimated cost for
managing your
investment
Administration fee
+ estimated cost
for managing your
investment
Cash
0.20
0.06
0
0.26
Conservative
0.20
0.28
0.0001
0.48
Balanced
0.20
0.40
0.0001
0.60
Growth
0.20
0.45
0.0002
0.65
Cash
0.20
0.06
0
0.26
Fixed Interest
0.20
0.24
0
0.44
International Shares
0.20
0.37
0
0.57
Australian Shares
0.20
0.35
0.0007
0.55
Property
0.20
0.32
0
0.52
Retirement Income
Allocated Pension
investment plan
READYMADE PLANS
MY PLAN
Performance fees
Tax
Performance fees are paid to external investment managers
when the investment return on the assets exceeds their
agreed performance targets. Performance fees are typically
calculated as a percentage of the amount by which the
investment manager exceeds the performance targets.
An overview of taxes relevant to GESB’s Retirement Income
Allocated Pension is provided below.
The estimated performance fees payable to the external
investment managers are included in the previous table.
Exit fees
GESB does not currently charge an exit fee, but may do so
in the future.
Family Law
GESB does not currently charge a fee to provide information
to members or interested persons in relation to Family Law
matters, or split benefits, but may do so in the future.
Fee changes
GESB reserves the right to review and change the fees in
this document without your consent to ensure the structure
and level of fees is appropriate, including any additional
costs resulting from any government, tax or statutory
charge. We will always inform you of any changes through
our website or through our six monthly member statement.
If the change is an increase in fees or charges, we will give
you 30 days’ written notice of the change.
No tax on investment earnings
Unlike most other forms of investment, the Retirement
Income Allocated Pension is not required to pay tax on its
investment earnings. This means that your investment has
more growth potential.
Tax on entry to Retirement Income
When you transfer your investments into the Retirement
Income Allocated Pension, the tax applied on the transfer
is the same as if you transferred to any other super
income stream.
Transferring monies from untaxed schemes
When your funds are transferred from an untaxed scheme
like West State Super or Gold State Super, tax will be
deducted from the untaxed element of the taxable
component as follows:
Taxable component - untaxed element
• Amounts up to the untaxed plan cap of
$1.395 million5 - 15%
• Amounts above the $1.395 million cap - 49%
The ICR and performance fees may change periodically.
4 The estimated performance fees shown are calculated by combining the estimated performance fees charged by the underlying
investment managers for each of the investment options listed above.
5 For the 2015/16 financial year, indexed annually for future years.
3
Example
Maria, Michael, Chris and David are all current Retirement Income Allocated Pension members with different balances.
They have each invested in the Balanced plan. Here are the fees they pay in one year, assuming their balance
remains constant.
Retirement Income Allocated
Pension Balanced plan
Investment
fee
Account balance
Maria
Michael
Chris
David
$30,000
$50,000
$100,000
$200,000
$0
$0
$0
$0
Investment fee
Nil
PLUS
Administration fee
0.20% pa
$60
$100
$200
$400
PLUS
Other indirect costs for the
Balanced plan
0.40% pa
$120
$200
$400
$800
EQUALS
Cost of Balanced plan
0.60%6 pa
$180
$300
$600
$1,200
Tax-free component
• No tax is payable on the tax-free component
If you are a West State Super or Gold State Super member
with a surcharge liability, before withdrawing or
transferring your benefit, you may want to take advantage
of a strategy that enables you to pay your surcharge debt in
a tax-effective manner.
For more information, see the
‘Super Contributions Surcharge’ fact sheet available
at www.gesb.com.au/factsheets or contact your
Member Services Centre on 13 43 72.
Transferring monies from taxed schemes
When your funds are transferred from a taxed scheme
like GESB Super, no tax will apply on the transfer.
Tax components
Your super account may include the following tax
components:
• Tax-free component – this is the tax-free component
from the super scheme you exited. It generally includes
your personal contributions not claimed as an income
tax deduction and co-contribution payments.
If you transferred from an untaxed scheme like
West State Super or Gold State Super, it will also include
any part of the rollover that was taxed at 49% because
you exceeded the untaxed plan cap
• Taxable component-taxed element – this is the taxable
component from the scheme you exited. It generally
includes any employer contributions, salary sacrifice
and your deductible personal contributions.
If you transferred from an untaxed scheme like
West State Super or Gold State Super, it will include
any part of the rollover that was taxed at 15% up to
the untaxed plan cap
Tax treatment on income stream or lump-sum
payments
Income stream
No tax if aged 60 or over
If you are aged 60 or over, your regular income stream
payments or lump-sum payments from your Retirement
Income Allocated Pension will be completely tax-free and
you will not be required to include these payments in your
personal income tax return.
Tax payable between current Commonwealth
preservation age7 and 59
If you are aged between current Commonwealth
preservation age and 59, the taxable component of your
income stream will be taxed at your marginal tax rate
(plus Medicare Levy8) less a 15% tax offset on the taxable
component. No tax is payable on your tax-free component.
Your super benefit usually has a tax-free and taxable
component, which is set when you transfer your benefit.
Each income payment will contain proportional amounts
of each component, based on the value of your total
super benefit.
Tax payable prior to reaching your Commonwealth
preservation age
Should you meet a condition of release before reaching
your Commonwealth preservation age, you will be able to
transfer your super into an allocated pension. Tax on
income streams will be charged at your marginal tax rate to
the taxable taxed component. For more information,
please see our ‘Tax and super’ factsheet available at
www.gesb.com.au/factsheets.
6 Estimated total fee for the Retirement Income Allocated Pension Balanced plan.
7 Your Commonwealth preservation age is dependent on your date of birth. For more information on your Commonwealth
preservation age, read the ‘Accessing your super’ brochure available at www.gesb.com.au/brochures.
8 Includes 2% Medicare Levy.
4
Lump-sum payments
Example
No tax if aged 60 or over
Frank - aged under 60
• Frank is 57 and transfers $250,000 to a Retirement
Income Allocated Pension
If you are aged 60 or over, any lump-sum payments will be
tax-free and you will not be required to include these
payments in your income tax return.
• His $250,000 is made up of $210,000 of taxable
component and $40,000 of tax-free component
Tax payable between current Commonwealth
preservation age9 and 59
• He chooses to take monthly income-stream
payments of $1,600
His monthly pension will consist of the
following components:
Tax-free
($40,000 ÷ 250,000 x $1,600)
$256
If you receive a lump-sum payment, the taxable component
will be taxed as follows:
• 0% up to a low rate cap of $195,00011
• Any amount in excess of the $195,000 cap is taxed at a
maximum of 17%10
No tax is payable on the tax-free component.
Lump-sum payments if you are terminally ill
Taxable-taxed
($210,000 ÷ 250,000 x $1,600)
$1,344
Total
$1,600
As Frank is 57, he will have to pay tax at his marginal
tax rate on the taxable-taxed component. However, a
15% tax offset will be available to reduce the tax he has
to pay. No tax is paid on the tax-free component.
Superannuation lump-sum payments are tax-free when
paid to members with a terminal medical condition, as long
as members are able to provide GESB with the necessary
supporting documentation.
More information
For more information on GESB’s Retirement Income
Allocated Pension, read the ‘Retirement Income
Allocated Pension Product Information Booklet’
available at www.gesb.com.au/brochures, or call your
Member Services Centre on 13 43 72.
9 Your Commonwealth preservation age is dependent on your date of birth. For more information on your Commonwealth
preservation age, read the ‘Accessing your super’ brochure available at www.gesb.com.au/brochures.
10Includes 2% Medicare Levy.
11 For the 2015/16 financial year, indexed annually for future years.
Disclaimer: the information contained in this information sheet is of a general nature, and does not constitute legal, taxation or personal
financial advice. In providing this information GESB has not taken into account your investment objectives, financial situation or needs.
GESB is not licensed to provide financial product advice. You should read this information sheet in conjunction with other relevant
disclosure documents GESB has prepared for Retirement Income Allocated Pension members including the ‘Retirement Income Allocated
Pension Product Information Booklet’ available at www.gesb.com.au/brochures. You may also wish to consult a suitably qualified adviser
to ascertain whether the information contained in this information sheet is appropriate for you.
How to contact us
T Member Services Centre 13 43 72
F 1800 300 067
PO Box J 755, Perth WA 6842
Level 4 Central Park, 152 St Georges Terrace, Perth
1117.9 06/15 ISS1
Government Employees Superannuation Board ABN 43 418 292 917
W gesb.com.au