Macquarie Lifetime Income Guarantee
Guaranteed Income for life with account based flexibility
Features
The Macquarie Lifetime Income Guarantee Policy provides you with a flexible, low cost investment which guarantees you will receive at least a minimum level of income for life without locking away your superannuation savings.*
| Guaranteed income for life |
Attractive guaranteed income rate for life Bonus rate ensures high level of early income |
Payments from the Policy are exempt from income tax |
|---|---|---|
| Maintain access to your savings |
Strong market performance locked in each Investment Anniversary Selection of Investment Funds tailored for retirees |
Remaining Investment Account goes to estate on death of investor Estate Protection Option available to help protect the amount passed to your estate on death |
| Simple and flexible solution |
Income is paid directly into your nominated bank account each month Investor chooses the level of income drawn from funds Ability to change your asset allocations during life of product |
Make withdrawals at any time Cost effective Flexibility to stop Guarantee at any time |
Who may MLIG suit?
Retirement should be a time to enjoy what you have achieved over your lifetime, not a time to worry if your savings will last. With people living longer, planning for retirement has become increasingly challenging.
With a 50% chance your pension will need to last until age 93^, you may need market linked returns but you may be concerned about market falls.
Macquarie Lifetime Income Guarantee may be suitable for SMSF retirees who:
- Are concerned about outliving their savings as a result of poor market performance or living longer than expected
- Want guaranteed income to provide security and peace of mind
- Desire equity market exposure without impacting income certainty
- Need flexibility to alter their retirement strategy as their situation changes
- Provide security to spouse and beneficiaries
How it works
The diagrams illustrate some of the key features of the Policy assuming you are 65 years old and invested $400,000 in the Policy;
Scenario 1: Strong market performance
Scenario 2: Poor market performance
1. Investment account balance
Your initial investment establishes your Investment Account balance. Like any account based pension the balance changes over time based on the performance of the Investment funds selected and withdrawals made. In Scenario 1, where your Investment funds have performed well you would still have funds remaining when you are 100 years old. In Scenario 2, investment returns are poor and you would run out of savings at age 85, however you are still guaranteed to be paid income for life.
2. Guarantee base
The Guarantee base starts as the value of the Investment Account balance (net of any upfront withdrawals). Each year it “locks in” strong investment market performance if the Investment Account balance is greater than the prevailing Guarantee base. In both scenarios the Guarantee Base ratchets up while the Investment Account balance is growing, but doesn’t fall when the Investment Account balance starts to decline.
3. Guaranteed lifetime
Income Guaranteed Lifetime Income = Income rate x Guarantee base
You are guaranteed to receive the Guaranteed Lifetime Income for the rest of your life. The level of Guaranteed Lifetime Income that will be payable each year will depend on your Guarantee base and your Income rate at that time.
Monthly income payments are initially drawn from the Investment Account until it has been exhausted at which point the Guarantee will pay you the Guaranteed Lifetime Income.
4. Income rate
Income rate = base rate + lifestyle bonus rate
Assuming you are 65 years old when you invest in the Policy, your Income Rate starts at 6.0% - this comprises a Base Rate of 4.0% p.a. which is guaranteed for life, and a 2.0% Lifestyle Bonus Rate for at least the first 5 years.
Both scenarios show the Base Rate remaining constant, and Scenario 1 shows that the Lifestyle Bonus Rate allows you to draw a higher income for longer if your Investment Account performs well.
5. Access to investment balance
You retain access to your Investment account funds at all times. You may make additional withdrawals at any time if required. When you pass away, the remainder of your Investment Account passes to your estate.
Tools
Risks
An investment in the Policy has a number of key risks including:
- Macquarie Life credit risk - By taking out a Policy you are taking on exposure to the ability of Macquarie Life to continue to make payments under the Policy in the future which will depend largely on the continued financial strength and solvency of Macquarie Life over the term of your investment.
- Investment Fund performance risk - The performance of the Investment Funds is linked to the performance of the Underlying Assets they invest in. Any fluctuations in the value of the Investment Funds will transfer into fluctuations in your Investment Account balance.
- Inflation risk - Inflation risk refers to the possibility of your investments losing "real" value if they do not keep pace with market inflation. Your Guaranteed Lifetime Income will not be indexed to inflation so over time inflation may reduce the purchasing power of your Guaranteed Lifetime Income.
- Change of law risk - Changes in laws or their interpretation, including superannuation, taxation and corporate regulatory laws, practice and policy could have a negative impact on your investment in the Policy.
- Volatility management process - The asset allocation within the Growth Asset Investment Funds will be managed according to Macquarie Life's perspective on market risk through Volatility Management. However, there is the risk that Volatility Management may not prevent your exposure to Growth Assets through these Investment Funds being high when equity markets perform poorly or conversely, cause your exposure to Growth Assets to be low when equity markets perform well, resulting in underperformance of your investment in the Lifestage Fund or Growth Asset Investment Funds relative to the performance of the Underlying Assets of the Investment Funds or relative to the performance of cash.
- Excess withdrawal risk - If you need to withdraw a lump sum amount throughout your retirement you will have to make an Excess Withdrawal (subject to certain exceptions). As a result of an Excess Withdrawal being made, your Guarantee Base and your Guaranteed Lifetime Income level will be reduced proportionately. If you make an Excess Withdrawal in the first 7 years of your investment you will also incur an Excess Withdrawal Fee of 2.0% of the Excess Withdrawal.
Please refer to the PDS for a full description of the risks. All investments involve a degree of risk. Please ensure you consider all the risks of investment in the Policy set out in the PDS carefully and seek financial, legal and taxation advice before making a any decision about investing in the Policy.