Annuity

What should be entered as an Annuity

In Pathfinder, you can model the following types of annuities:

Fixed term: Payments start from the purchase date and last for a specified period of time. There is an option to invest in multiple proposed fixed term annuities with the same details in different years, so that you do not need to add several similar annuities.
Lifetime immediate: Payments start from the purchase date and continue for the entire analysis period.
Lifetime deferred: Payments start from a specified age and continue for the entire analysis period.

Innovative income streams, such as the MyNorth ‘Deferred Lifetime Income account’ and ‘Lifetime Super account’, can be modelled as Annuities, since the same rules apply.

Annuities can be started with super money or non-super money.

How to add an Annuity

To add an existing Annuity, go to the Current situation step (top menu), then the Assets & Loans sub-step. And then click the +Add Assets button (on the left menu). Then, choose 'Annuity'
To add a new Annuity, go to the Cash flows & Goals step (on the top menu), then the Review Assets & Loans sub-step. Then click the Add new Assets & Loans button (at the end of the page). Then choose 'Purchase an annuity'.

Modelling options for Annuity

Start a new annuity with superannuation funds

Add the new annuity, at the Review Assets & Loans sub-step (under the Cash flows & Goals step on the top menu)
For the Source field, choose 'Super money'

Start a new annuity with non-super money

Add the new annuity, at the Review Assets & Loans sub-step (under the Cash flows & Goals step on the top menu)
For the Source field, choose 'Non-super money'
1. Pathfinder will work out how to deposit funds into the Annuity (e.g. withdraw from other directly owned assets, use surplus income after meeting expenses)

Start multiple new fixed term annuities with the same details over different years

Add the new annuity, at the Review Assets & Loans sub-step (under the Cash flows & Goals step on the top menu)
For the Type field, choose 'Fixed term'. This will allow you to see the Options for investments button.
For Options for investments, select 'Allow multiple investments'
Select your desired option for Ongoing investment: 'Robot' to let Pathfinder optimize (how much and when to invest in multiple fixed term annuities); 'Set exact investment' to specify how much to invest and in which years using the series builder; or 'Set investment range' to specify a minimum and maximum limit for specific years using the series builder for Pathfinder to determine the amount.
Fill in the remaining fields. All fixed term annuities part of this 'multiple investment' will have these details.

Innovative income streams

Innovative income streams can be modelled as Lifetime annuities, as the same rules apply: Since 1 July 2019, lifetime annuities have special treatment under the age pension means test, where only a portion of the investment is considered, making it attractive for retirement:

For the income test, only 60% of the annuity payments are assessed.
For the asset test, 60% of the purchase amount is assessed; then, 30% when the person turns age 84, or after a minimum of 5 years.

The assessment date can differ depending on the annuity type (Immediate or Deferred) and source used to purchase it (Super or Savings), but it is generally the purchase date. Pathfinder will automatically apply the correct assessment rules based on the annuity details you enter. These rules are in line with the ‘Innovative Superannuation Income Streams’ Regulations (2017) which govern the recently popular MyNorth ‘Deferred Lifetime Income account’ and ‘Lifetime Super account’.

Results for Annuity

See Annuity results.

Related items

Strategy Development Service (SDS) and Background adjustment options

If the case includes complex analysis that you are not able to do in Pathfinder yourself, Optimo Support may be able to do some background adjustments to help you get the results you need. Depending on the complexity, this may be included as part of the standard support or additional charges may apply. For more details, please see Modelling outside the scope of Pathfinders' standard modelling.

Some examples of things that are outside the scope of Pathfinder's modelling and how Optimo support can help, are listed below:

Adjustment

Details

Jointly owned annuities

Pathfinder can only model annuities with one individual as an owner.

Ifg you would like to model a jointly owned annuity, we will suggest that you enter two separate annuities.