Disclaimer 

The Allianz Guaranteed Income for Life Retirement Strategy Illustrator ("tool") is an educational tool that is specifically prepared for authorised financial advisers in Australia and is not intended to be used by retail investors. This tool allows you to model and generate an estimated hypothetical retirement portfolio including the Allianz Retire+ Guaranteed Income for Life (AGILE) product and compare how it may perform against a portfolio with only a standard account-based pension. In addition, it allows you to compare a portfolio including AGILE to a portfolio including a hypothetical traditional immediate and/or deferred annuity.

The results of this tool, including the projected performance and impact of AGILE in a portfolio, are illustrative only and designed to educate and raise awareness of how a product in the lifetime income stream product class may function in the Australian market. The results are based on certain assumptions and future projections that are not predictions or guarantees. Actual returns on an investment may differ materially from the information provided by the tool and do depend on some of the information you enter. Any advice provided in this tool is general advice only and does not take into account your client’s objectives, financial situation or needs. Before acting on anything contained in this material, you should consider the appropriateness of the information received, having regard to your client’s objectives, financial situation and needs. Past performance is not a reliable indicator of future performance. You should ensure that you read and understand the Disclaimers, Assumptions and Limitations that relate to the tool, as provided in the link at the bottom of the tool.

This tool should not be relied on for the purposes of making a financial decision or a decision in relation to a financial product. As a licensed financial adviser, you are solely responsible for considering the appropriateness of any product for your clients’ circumstances. In providing this tool to you, Allianz Retire+ is not providing financial advice to you or your clients. You acknowledge that you are not acting as Allianz Retire+’s agent and agree that you will not represent that you are Allianz Retire+’s agent.

AGILE consists of two phases: (1) Growth and (2) Lifetime Income. During the growth phase the investment will continue to benefit from market exposure via returns linked to an equity index that may rise or fall (with a level of investment protection). The lifetime income phase can be commenced any time after the third year, by converting the Investment Value to a guaranteed Lifetime Income stream. with a choice of Rising or Fixed Lifetime Income options.

As the Income Overview section only shows the potential retirement income from the start of the projection if the investor is retired or from the inputted retirement age if not yet retired, it does not directly illustrate the Investment Value of the AGILE product during the growth phase. However, this is reflected in the Withdrawal and Cumulative output graphs as part of the investor’s combined retirement portfolio.

 Use of the word ‘guarantee’ in relation to Allianz Guaranteed Income for Life (AGILE) refers to an assurance that certain conditions or contractual promises will be fulfilled by Allianz Retire+ from the available assets of its Statutory Fund No 2, in relation to the product terms. This includes ‘guaranteed’ income payments in the Lifetime Income Phase which will be paid from the available assets of Statutory Fund No 2, noting that Allianz Retire+ may terminate the product in certain limited circumstances as outlined in the Product Disclosure Statement available on this website.

Allianz Guaranteed Income for Life (AGILE) is issued by Allianz Australia Life Insurance Limited (ABN 27 076 033 782) (AFSL 296559) (Allianz Retire+). Allianz Retire+ is a registered business name of Allianz Australia Life Insurance Limited. Prior to making an investment decision you should read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD) which are available on our website (www.allianzretireplus.com.au). The tool is current as of February 2024 and is subject to change. To the extent permitted by law, neither Allianz Retire+ nor any of its related entities, agents or employees accept any liability for any loss or damage arising, directly or indirectly, from reliance on this tool.

Personal information collected via the tool is only for the purposes of performing illustrative calculations and will be handled in accordance with our Privacy Policy available at: https://www.allianzretireplus.com.au/footer/privacy-policy.html.

Assumptions

The results shown will vary depending on the assumptions used by the tool and the user’s inputs. All assumptions used are believed to be reasonable based on the current retirement income stream landscape and legislation.

Please also note, this tool does not include all of the product features offered under the AGILE PDS dated 24 November 2023. Given rates and features can be different from one lifetime income stream to the next, these may differ amongst income streams offered by various providers. Below are the key assumptions that are used in the tool.

  • This tool is designed to be used by advisers only, in respect of people who are aged 50-80 years and wanting to see if a guaranteed lifetime income could be of benefit in retirement.
  • Assumptions have been made for simplification purposes to provide a simple way to see how AGILE may perform in a portfolio as part of a retirement strategy. This tool is not intended to replace an adviser’s comprehensive modelling tools, and it is expected that advisers would also model their client’s full situation in their existing comprehensive modelling tool prior to providing advice.
  • The tool takes inflation into account and initially shows all future results in today’s dollars, however there is a toggle to show future dollars. Inflation is based on the Consumer Price Index (CPI) which is defaulted to 2.5% p.a., being the mid-point of the RBA’s annual inflation target of 2% to 3%, and can be changed in Settings. Please note, if the projection commences prior to retirement, the results may overstate retirement income in relation to living standards if wage inflation exceeds CPI. This is because prior to retirement the cost of rising community living standards may increase by more than inflation.
  • Market returns for growth and defensive assets are based on Blackrock Capital Market 30-Year Expected Return assumptions (as at 31 December 2022) and can be changed in the Settings. Please note, the market returns entered by the user may have a material impact on the results provided by the tool and may vary considerably from actual future returns which may be positive or negative from one year to the next.
  • The tool assumes that the first year is the start of the current financial year and that the investor’s birthday is on 1 July. Likewise, where a Target Retirement Age is entered, it is assumed to occur on the birthday of the life insured at the start of the relevant financial year. No allowance has been made for the projection to commence, or a birthday or retirement to occur, part-way through a financial year.
  • Although AGILE can be purchased with non-super money, this tool only reflects the potential outcome for superannuation money.
  • Lifetime income stream products may not be suitable for people with low superannuation balances. As such a minimum Super Balance of $100,000 is required for a single person or Person 1 of a couple. The tool however does not require a minimum Super Balance for Person 2 of a couple, to reflect that Person 2 can select not to have any allocation to AGILE/ lifetime income stream.
  • The tool allows a maximum of $5,000,000 to be entered into the Super Balance field for each Person (for a maximum of $10,000,000 for a couple).
  • Where the user deselects the ‘Currently Retired’ box, they are required to enter a Target Retirement Age. The lowest retirement age allowed is the higher of 59 (current lowest preservation age) or one year after the current age, with a maximum of age 80.
  • Where the user selects the ‘Spouse Insured’ option, details of the Spouse must be entered under Person 2. As per eligibility rules, Person 2 must be above age 50 and below age 80 at commencement of the AGILE investment.
  • Where the user selects the ‘Age Pension+’ option, the date of election is assumed to be upon the person’s 65th birthday, or the age of retirement input by the user if earlier (Reaching age 65 is an automatic Condition of Release and meeting a condition of release is an eligibility requirement to elect ‘Age Pension+’).
  • The tool assumes salary increases in line with CPI. CPI can be adjusted in the Settings.
  • Employer Superannuation Contributions defaults to an initial rate 11% (in line with the superannuation guarantee rate) of the life insured’s salary and increases to 11.5% for year 2 and 12.0% from year 3 onwards, in line with legislated increases. This rate can be adjusted in Settings. This field reflects all concessional contributions and any percentage input will be limited to a maximum contribution cap of $27,500 (2023/24).  
  • Investment earnings are taxed at 15% on the super balance to age 65, or retirement age if earlier. At this time a calculation is made to determine if any of the total super balance is in excess of the General Transfer Balance Cap (TBC). The proportion of the balance under the TBC is then assumed to be tax free and any excess proportion is taxed at 15%.
  • No allowance has been made for other tax, such as income tax on the salary or earnings of any other investments the investor may hold.
  • The tool does not show the life insured’s net income position prior to retirement, although the growth of their superannuation prior to retirement is reflected in the Withdrawal and Cumulative output graphs as part of that person’s combined retirement portfolio.
  • AGILE rates are the same regardless of gender. Selecting a gender is relevant if the user includes the traditional and/or deferred annuity comparison, for which rates are generally gender specific. It is also used to show the life-expectancy line in the Overview screen.
  • Where couple is selected, it assumes both members of the couple remain alive during the full projection period. No allowance has been made for where a member of a couple may pass away during the projection period.

 

Desired Income

  • The tool calculates a Desired Income for retirement based on the Input Details, and roughly estimates a retirement income that could be potentially maintained until life expectancy (of Person 1 if a couple) for an Account Based Pension (‘ABP’) only strategy, with the ABP balance being exhausted thereafter.
  • The Desired Income is recalculated each time a change is made to the Input Details or other assumptions from the Overview page and Settings.
  • Life expectancy based on Australian Life Table 2015-17, with 25-year mortality improvement factors.
  • Users can change the Desired Income by clicking on the Padlock icon and inputting their own amount. When the padlock is in the unlocked position it will re-calculate each time a change is made.
  • The Desired Income is generated from the combination of Super Balance and Age Pension (if selected and eligible) only. In some cases where the minimum required income from super is more than sufficient to meet the Desired Income, any excess funds are assumed to be held in cash (earning 0% interest) and will be drawn down as the Super Balance is exhausted.
  • Assets and income inputted into the Centrelink Details section is only relevant for calculating the life insured’s potential Age Pension. If a person intends using non-superannuation funds to meet retirement income needs, the desired income can be reduced to reflect the amount that would be met from these funds.
  • Where a couple outcome is being projected, the combined Desired Income is allocated proportionally to each member of the couple based on their individual Super Balances.

 

AGILE

  • The tool assumes a default allocation of 25% to AGILE – ‘Agile Allocation’. The default AGILE allocation for Person 2 of a couple may be different.
  • AGILE has a minimum investment amount of $20,000.
  • The maximum AGILE Allocation is 99%.
  • At any time on or before commencing the Lifetime Income Phase and upon meeting a relevant condition of release[1], ‘Age Pension+’ option may be elected which may qualify the investor for additional Age Pension due to the AGILE investment being subject to a reduced Age Pension assets test for social security purposes (which is subject to the Social Security regulations from time to time). Electing this option will also mean the amount of money that can be accessed as a withdrawal or claim upon death is capped at legislated maximums, and vary the Lifetime Income rates applicable upon commencement of the Lifetime Income Phase.
  • Any time after the third year, investors can start the guaranteed lifetime income by commencing the Lifetime Income Phase. The guaranteed lifetime income is determined by multiplying their Investment Value on the Lifetime Income Commencement Date by their Lifetime Income Rate. At this time, two elections are available: (1) a Spouse Insured option – which would mean that, upon death, the Lifetime Income continues to be paid for the lifetime of any surviving spouse[2]; and (2) a choice of either Lifetime Income Fixed or Rising Income payment options. Income payments will continue to be paid until death, guaranteed by Allianz Retire+ even after the Investment Value falls to zero.
  • The Investment Value of AGILE is accessible at any time, however any withdrawal above the Free Withdrawal Amount – ‘FWA’ (5% of the initial Investment Amount each year) in the Growth Phase or above the annual income payments during the Lifetime Income Phase within the first 10 years may be subject to a Market Value Adjustment (MVA). Please refer to the PDS for more information on the MVA. The tool does not allow for a future withdrawal, however the Withdrawal Value shown in the graphs is net of any MVA applicable assuming no change in market environments.
  • Where ‘Age Pension+’ is elected there is no access to a FWA in the Growth Phase; and the withdrawal value will be limited to a legislated maximum commonly referred to as the Capital Access Schedule.
  • The time at which income from AGILE can commence must be after a minimum of three years and must be commenced by age 100. As such, the Age AGILE Income Starts field has been limited to reflect this. If an Investor elects the Age Pension+ option, AGILE income must be commenced by life expectancy – the tool does not apply this limitation and therefore actual experience may differ from what is displayed here.
  • For purposes of the tool, the investor must be retired before income from AGILE can commence.
  • The default allocation in AGILE is 50% into the Australian Equity Index – Partial Protection: Initial 10% and 50% into the Global Equity Index – Partial Protection: Initial 10% options. These can be changed in Settings to any combination of the four AGILE investment options.
  • After initial selection, the tool does not allow for the user to change their investment options in following years of the projection.
  • There is no investment choice in the Lifetime Income Phase (once AGILE has commenced paying income), the Investment Value is automatically switched 100% to the Australian Equity Index – Total Protection option.
  • The tool assumes the Australian Equity Index and Global Equity Index Partial Protection: Initial 10% options are equivalent to a growth asset.
  • The tool assumes the Australian Equity Index and Global Equity Index Total Protection options are equivalent to a defensive asset.
  • Assumptions for growth and defensive asset returns are based on BlackRock Capital Market 30-Year Expected Return Assumptions (as at 31 December 2022) and can be changed in the Settings.
  • Total charges for AGILE are a 0.80% p.a. Product Fee and 1.15% p.a. Lifetime Income Premium.
  • AGILE offers two options for the Lifetime Income Phase: Lifetime Income – Fixed, and Lifetime Income – Rising. If Lifetime Income – Fixed is selected, the annual income will remain constant for the duration of the projection. It will have a higher starting income than the Lifetime Income – Rising option, however it may lose purchasing power over time due to the impact of inflation.
  • If Lifetime Income – Rising is selected, the income will increase each year in line with any positive annual Australian Equity Index movements up to a Maximum Return (or remain at the same level if zero or negative movement in that index). The tool assumes the annual income from AGILE increases in line with the gross defensive asset return assumption.
  • The Lifetime income percentages are based on the AGILE Lifetime Income Rates available to investors who purchase AGILE between 1st March and 31st March 2024, these may be updated as AGILE rates are changed. The Lifetime income percentages that apply for a particular investor may differ depending on whether they have elected:
    • a Fixed or Rising Lifetime income
    • the Spouse Insured option
    • the Age Pension+ option
  • For Centrelink purpose, AGILE purchased with superannuation monies is assessed as follows (note treatment differs between whether or not Age Pension+ is elected):

Age Pension+ NOT elected*

Super Phase

AGILE Phase

Asset Test

Income Test

Accumulation Phase if AGILE benefits are preserved

Growth Phase

Exempt

Nil assessment

Lifetime Income Phase

Exempt

Nil assessment

Pension Phase (including TTR) or Accumulation Phase if benefits are unrestricted non-preserved

Growth Phase

Higher of:

·     Death Benefit, or

·     60% of purchase amount until age 84 (or min 5 years),  

30% thereafter.

Nil assessment

Lifetime Income Phase

60% of income payments (lump sum withdrawals not assessed)

 

Age Pension+ IS elected*

Super Phase

AGILE Phase

Asset Test

Income Test

Accumulation Phase if AGILE benefits are preserved

Growth Phase

Exempt

Nil assessment

Lifetime Income Phase

Exempt

Nil assessment

Pension Phase (including TTR) or Accumulation Phase if benefits are unrestricted non-preserved

Growth Phase

Higher of:

·     60% of purchase amount until age 84 (or min 5 years), 30% thereafter

Nil assessment

Lifetime Income Phase

60% of income payments (lump sum withdrawals not assessed)

*This information is based on current social security regulation which can change over time.

Account-Based Pension

  • This tool allows you to compare the outcomes for a retirement portfolio where AGILE is included as part of an account-based pension, against an account-based pension without AGILE. It also allows you to compare a retirement portfolio where a hypothetical traditional and/or deferred annuity is held with an account-based pension.
  • The default return for growth assets is assumed to be 8.28%p.a. and for defensive assets 4.37% p.a. and can be changed in the settings. These default assumptions are based on BlackRock 30-Year Capital Market Assumptions as at 31 December 2022, as follows:

Asset

Expected average annual return over 30 years

Allocation in 100%
Growth Portfolio

Allocation in 100% Defensive Portfolio

Australian Large Cap Equity

6.64%

30%

0%

Global ex Australia Large Cap Equity

8.82%

30%

0%

Emerging Large Cap Equity

11.08%

10%

0%

Global Small Cap Equity

8.23%

10%

0%

Global Infrastructure Equity

10.28%

10%

0%

Global Core Real Estate

6.85%

10%

0%

Global Aggregate Bonds

4.45%

0%

40%

Australian Corporate Bonds

4.98%

0%

20%

Australian Government Bonds (10+ yrs)

4.91%

0%

20%

Cash

3.60%

0%

20%

Expected Average Annual Return

 

8.28%

4.37%

BlackRock Investment Institute, February 2023. Data as of 31 December 2022.
Notes: Return assumptions are total nominal returns gross of fees. Returns are unhedged in Australian dollars, with the exception of global aggregate bonds.

Please note: past performance is not a reliable indicator of future performance and actual returns for the above asset classes may differ materially from the above default returns as used in the tool and may be positive or negative in any particular investment timeframe.

  • The default Risk Profile asset allocation is 60% growth assets and 40% defensive assets. The Risk Profile can be changed on the Overview screen. For couples the Risk Profile is assumed to be combined, it is not possible to set a separate Risk Profile for each member of a couple.
  • The Risk Profile is applied to the investor’s superannuation portfolio as a whole. The allocation to AGILE will result in a rebalance of the Account Based Pension so the overall allocation is at the desired level. Annuities are considered to be a 100% defensive asset, unless the market-linked option is selected, which will be assumed to be in line with the investor’s Risk Profile.
  • In the Growth phase, AGILE is assumed to be classified as follows:
    • The portion of AGILE invested in the Partial Protection option is assumed to be a 100% growth asset;
    • The portion of AGILE invested in the Total Protection option is assumed to be a 100% defensive asset.
  • When the AGILE Lifetime Income Phase commences and the investment option is switched to the Australian Equity Index Total Protection option, (which is assumed to be a 100% defensive asset), the asset allocation of the remaining account-based pension is rebalanced to maintain the investor’s overall Risk Profile. In some instances the Risk Profile may not be met and comparison to an account-based pension portfolio may no longer be like for like. If this occurs the projection will still produce a result however a warning will appear.
  • Only the Super Balance is used for Risk Profile purposes. Assets entered into the Centrelink Details section are only relevant for calculating the investor’s potential Age Pension.
  • The default fee for the account-based pension is 0.95% p.a. and can be changed in Settings.

 

Immediate and Deferred Annuity Comparison

  • The tool allows you to compare how a retirement portfolio containing an immediate annuity or deferred annuity may compare to the AGILE portfolio and the non-AGILE base portfolio. These options can be selected in the Settings.
  • Default rates for a CPI index immediate annuity are provided and may be updated from time to time. The default rates may be calculated by Allianz Retire+ based on market conditions at the time and are not intended to reflect any particular immediate annuity provider’s rates.
  • For the immediate annuity, the user can choose to enter their own rates for a CPI index, level or market-linked immediate annuity. The indexation rate for the market-linked will be in line with the earnings rates for the investor’s risk profile based on the tool’s market assumptions.
    • Where the user has elected the Spouse Insured option, the user is required to enter their own immediate annuity rate and annuity options.
  • For the deferred annuity the user is required to enter their own rate and annuity options.
  • Please note, the rates entered by the user may have a material impact on the results provided by the tool and may vary considerably from actual rates of current immediate and annuity providers.
  • The allocation to the immediate and/or deferred annuity will be the same as the amount initially allocated to AGILE.
  • For Centrelink purposes the immediate and deferred annuity are assumed to meet the capital access schedule limitations and will therefore be eligible for the post-1 July 2019 concessional lifetime income stream treatment.
  • The withdrawal and death benefits shown in the graphs will be the maximum allowed under the Capital Access Schedule and may not reflect the real capital value depending on what the annuity provider offers.

 

Centrelink Age Pension

  • Where the user has selected to include age pension in the comparison, it is assumed any residency requirements are met and the life insured (or spouse insured if applicable) will apply for and receive the Age Pension as soon as they are eligible, subject to their level of assets and income.
  • Where ‘Age Pension+’ is elected, eligibility for Age Pension benefits may be enhanced through a more favourable asset test treatment, as the AGILE investment would be subject to favourable Age Pension assets test treatment. (Withdrawal and death benefits are capped at maximums set out in current legislation (commonly referred to as the Capital Access Schedule), and Free Withdrawal Amount cannot be accessed in the Growth Phase.)
  • The entitlement to Centrelink Age Pension is an approximation only based on rates and threshold applicable as at September 2023.
  • To maintain their real value and not fall behind community living standards, the Pension rates are generally indexed to either the Consumer Price Index (CPI), Pension and Beneficiary Living Costs (PBLCI) and the Male Total Average Weekly Earnings (MTAWE). The tool assumes Centrelink Rates are indexed by 3.0% p.a. and thresholds are indexed in line with CPI.
  • Deeming rates are assumed to remain constant at their current rates of 0.25% for the lower threshold and 2.25% for the upper threshold.
  • Amounts entered in the ‘Assets Deemed’, ‘Assets not Deemed’ and ‘Other Assessable Income’ fields are assumed to increase in line with CPI each year, and as such may not accurately reflect the growth in these funds over time.
  • If the investor is age 67 and over and not retired, the tool will calculate any Work Bonus based on the Annual Salary entered, where the first $300 per fortnight of employment income is exempt. It does not consider or allow for any Work Bonus Balance.
  • There is no specific allowance for employment income to be earned after the Target Retirement Age. Any ‘Other Assessable Income’ under the Centrelink Details section is assumed not to attract the Work Bonus.
  • The single/couple input is relevant for using the appropriate social security rates and thresholds. However, the tool does not illustrate Age Pension entitlements for illness separated couples.
  • The tool assumes the investors single/couple status and homeowner status remains as originally selected over the projection period.
  • Please note, any change to the law may impact the projected Age Pension amounts.
  • The Age Pension amounts in the projection are illustrative only and are not a prediction or guarantee of what the investor may be entitled to. It is not reasonable to adjust for any future changes to age pension entitlements, as they are wholly unknown.

 

Limitations

The tool is based on the information provided by the user, and certain assumptions that are believed to be reasonable based on current market conditions, current legislation and industry standards. This tool is intended to provide simplistic illustrations only, as such not all variables related to a life insured (or spouse insured’s if applicable) situation will be included and this should be considered a limitation of this tool.  

Please note, a lifetime income stream, including AGILE is intended to be a permanent purchase. Some lifetime income streams other than AGILE may not allow withdrawals, or may provide limitations on withdrawals, once commenced. As such, any investor would need to take into account any future lump sum capital consideration they may need (e.g. purchase of new car or medical expenses) and consider how they would fund this when deciding how much to allocate to a lifetime income stream. If a withdrawal is made or the lifetime income stream is closed, the total net benefit the investor receives may be less than they if they did not make a withdrawal or close the product.

This tool does not consider personal financial needs, both currently and in the future, including but not limited to the life insured (or spouse insured’s if applicable) expenditure requirements and debts. When making a financial decision, you should contemplate your client’s needs, objectives, and overall financial situation to determine whether a lifetime income stream, would be appropriate for your client’s circumstances.

This tool is not intended to be relied on for the purpose of making a decision in relation to a financial product.

Other limitations include that the results may not reflect:

  • All applicable fees and costs other than annual fees as described above (such as platform fees or Adviser Service Fees).
  • Changes to superannuation, taxation or other laws or regulations that may affect the assumptions used in the tool.
  • The maximum deferral period that applies if an Investor chooses the Age Pension+ Option which is life expectancy (i.e. the Investor cannot commence their lifetime income after life expectancy).

 

[1] A relevant condition of release means retirement, death, terminal medical condition, permanent incapacity, and attaining the age of 65.

[2] The surviving spouse must be over 50 and under 80 at the time of commencement of the AGILE investment, and election of this option may mean that a different set of age-based rates will apply when converting the Investment Value into a Lifetime Income.