Transition to Retirement Presenter’s name Job title Location Date

What is a Transition to Retirement (TTR) pension? In 2005, the Federal Government introduced laws designed to allow working Australians access to their superannuation This was made possible by establishing a ‘transition to retirement’ (TTR) pension with your existing super savings TTR pensions can allow you to: 1.Boost your lifestyle by reducing your working hours without reducing your income 2.Boost your retirement savings without impacting your income if you are still working 3.Boost your income so you have more money to cover your everyday living expenses. 2

What are the benefits of a TTR pension? You salary sacrifice some of your pre-tax income into your super account. This money is taxed at 15% inside super, compared to your marginal tax rate You start drawing an income from your TTR pension: If you’re between ages 55-60, this income is taxed at your marginal tax rate. However, you are entitled to a 15% tax offset. After age 60, this income is generally tax-free. By changing the structure of your income, you can use the savings to boost your super Also, once you start a pension account, all investment earnings on your pension account are exempt from tax 3

Superannuation rules to consider From 1 July 2015, the superannuation concessional contribution cap is $30,000 or $35,000 for people aged at least 50 by 30 June 2016 Self-employed people can claim a full tax deduction for personal contributions, subject to meeting certain requirements Everyone in a taxed superannuation fund can receive their super benefits tax-free from age 60 4

When can you access your super? 5 Date of birthPreservation age Before 1 July Between 1 July 1960 and 30 June Between 1 July 1961 and 30 June Between 1 July 1962 and 30 June Between 1 July 1963 and 30 June After 30 June

Let’s take a closer look... There are three main types of TTR strategies: 1.Janet looking to boost her lifestyle by easing into retirement 2.Roger working full time to boost his super for retirement 3.Patrick looking to access more money today and boost his income 6

Strategy 1 – Lifestyle Booster

Meet Janet Janet has a full-time salary of $50,000 p.a. ($41,453 p.a. after tax) She wants to work part- time from age 58 to ease into retirement when she turns 65 Janet has a $240,000 in her super account 8

Janet’s strategy – Lifestyle Booster Janet reduces her working hours and receives a reduced salary of $30,000 p.a. Janet’s financial adviser suggests she commence a TTR pension to supplement her reduced income By drawing an income of $15,006 p.a. from her TTR pension account, Janet can still receive the same take-home income as when she worked full-time – even after reducing her work hours Janet needs to consider the impact of drawing down on her retirement savings 9 In the first year alone, Janet saves $4,994 in tax

How does Janet benefit? Janet’s employer continues to make some Superannuation Guarantee payments into her super account The investment earnings on her TTR pension are tax-free compared to being taxed at 15% within the super environment Janet receives a 15% tax offset on the taxable portion of her TTR pension payments before age 60 Janet’s pension payments are tax-free from age 60 Assumption: Janet’s super account balance of $240,000 is comprised of a 70% taxable component and 30% tax-free component. This case study is used for illustrative purposes only. Assume investment returns of 5%. 10

Strategy 2 – Super Booster

Meet Roger Roger, 55, wants to retire at 65 and work full-time until then He earns $90,000 p.a. ($66,953 after tax) Roger has a $325,000 in his super account 12

Roger’s strategy – Super Booster Roger implements a TTR strategy and salary sacrifices $26,450 p.a. into his super account Roger rolls over his super into a TTR pension Roger receives $21,230 p.a. from his TTR pension to make up for the reduction in income from the salary sacrifice Roger receives income after tax ($66,953) 13

Roger’s income position - year one 14 Current position ($)With strategy ($) Original salary90,000 Salary sacrifice contribution0(26,450) Cash salary90,00063,550 TTR pension (taxable)021,230 Total income90,00084,780 Net tax and Medicare Levy(23,047)(17,827) Net cash after tax66,953

Roger’s retirement savings In the first year Roger’s retirement savings are boosted by $3,804 When Roger turns 60, payments from his TTR pension are tax-free If Roger was 60, using the same strategy his retirement savings would be boosted by $8,466 Assumptions: Roger’s super account balance of $325,000 is all taxable and fully preserved. Superannuation Guarantee is assumed unchanged at 9.5% of the original earnings base, no taxation deductions have been claimed and qualifying private hospital cover is in place. This case study is used for illustrative purposes only. Assumes investment returns of 7%. 15 In the first year alone, Roger saves an additional $3,804 in super

How does Roger benefit? The amount that Roger salary sacrifices is taxed at 15% compared to his marginal tax rate of 39% (including Medicare levy) The investment earnings on his TTR pension are tax-free compared to being taxed at 15% in his super account Roger receives a 15% tax offset on the taxable portion of his TTR pension payments before 60 Roger’s TTR pension payments are tax-free after 60 16

Strategy 3 – Income Booster

Meet Patrick Patrick, 60, is a Telecommunications Technician earning $75,000 p.a. ($57,578 after tax) Patrick has $400,000 in his super account Patrick is looking to access more money today to boost his income and cover his living expenses of $62,000 p.a. 18

Patrick’s strategy – Income Booster Patrick uses his super account balance to open a TTR pension As Patrick is over 60, his TTR pension payments are tax-free His financial adviser suggests Patrick salary sacrifices $27,875 before tax into his super draws an income of $22,387 in the first year from his TTR pension 19

Patrick’s income position – year one 20 Current position ($)With strategy ($) Original salary75,000 Salary sacrifice contribution 0(27,875) Cash salary75,00047,125 TTR pension (tax-free)022,387 Total income75,00069,512 Net tax and Medicare Levy (17,422)(7,512) Net cash after tax57,57862,000

Patrick’s strategy Of the additional $4,422 in Patrick’s disposable income: ̵ $4,422 is the difference in tax payable with and without the strategy ̵ Patrick’s superannuation balance also increases by $4,529 Assumptions: No taxation deductions have been claimed. Qualifying private hospital cover is in place. 21 In the first year alone, Patrick’s superannuation increases by $4,529

Things to think about These are some important considerations when assessing the suitability of a TTR pension: Concessional contribution caps limit the amount of your pre-tax salary you can contribute into your super tax-effectively Will your employer reduce its compulsory superannuation contributions (Superannuation Guarantee)? If you are under 65 and still working, you are restricted to receiving an income payment of 10% p.a. (maximum) from your TTR pension 22

Wanting to retire with a better future? A TTR strategy could help you reach your financial goals in retirement It’s important to seek individual advice about your circumstances 23

Disclaimer OnePath Custodians Pty Limited (ABN , AFSL , RSE L ) is the issuer of this presentation. The issuer is a wholly owned subsidiary of Australia and New Zealand Banking Group Limited (ABN ) (ANZ). ANZ is an authorised depositing taking institution (Bank) under the Banking Act 1959 (Cth). Although the issuer is owned by ANZ it is not a Bank. Except as described in any relevant Product Disclosure Statement (PDS), an investment with the issuer is not a deposit or other liability of ANZ or its related group companies and none of them stands behind or guarantees the issuer or the capital or performance of your investment. Your investment is subject to investment risk, including possible repayment delays and loss of income and principal invested. This information is current as at February 2016 but is subject to change. Updated information will be available free of charge by contacting Customer Services. The information provided is of a general nature and does not take into account your personal needs, financial circumstances or objectives. The case studies are hypothetical and are not meant to illustrate the circumstances of any particular individual. Before acting on this information, you should consider the appropriateness of the information, having regard to your needs, financial circumstances and objectives. You should read the relevant PDS available at onepath.com.au and consider whether a particular product is right for you before making a decision to acquire or continue to hold the product. 24

onepath.com.au Customer Services OneAnswer, GPO Box 5306, Sydney NSW