1. Financial Considerations for Early Retirement Schemes
14 October, 2018

2. Disclaimer
The information contained within this presentation is intended to provide general advice only. It has been prepared without taking into account your objectives, financial situation or personal needs. Prior to making any investment decisions, you should speak with a financial adviser to consider whether this information is appropriate for your needs, objectives and circumstances. You should obtain a copy of the relevant product disclosure statement (PDS) prior to making a decision regarding any investment in any financial product. UniSuper defined benefits (including defined benefit pensions) are not guaranteed and are subject to the risk that the pool of assets supporting them may not be sufficient to meet all of UniSuper’s defined benefit obligations. In the event of prolonged underfunding, clause 34 of UniSuper’s trust deed provides a mechanism for defined benefits to be reduced on a fair and equitable basis. A clause 34 monitoring period was recently concluded and it was resolved to reduce the defined benefit formula from 1 January 2015 by changing the way Benefit Salary is determined as it applies to service on and after 1 January This change does not affect defined benefits or pensions that become payable before 1 January There are three further clause 34 monitoring periods in place, concluding on 30 June 2015, 30 June 2016 and 30 June This information is current as at July 2014 and is based on our understanding of legislation at that date. Information relating to the 2014/15 Federal Budget is based on our understanding of the proposals. The information provided in this presentation in relation to these announcements is subject to change and certain proposals may not become effective until they are enacted by Parliament. You should not rely on this information and it should be verified prior to making any decision The information contained in this presentation is not legal, taxation or accounting advice. Professional advice should be obtained before making any decisions. Whilst care has been taken in the preparation of this information, the accuracy or completeness of the information is not guaranteed. This presentation was prepared and issued by UniSuper Management Pty Ltd ABN , AFSL No: , which is also the administrator of, and wholly owned by, the UniSuper Superannuation fund (ABN ). UniSuper Limited (ABN ) is the trustee of the fund. If you would like to contact us please do so on or alternatively send us an to

3. UniSuper’s awards – super & pensions
SuperRatings, a superannuation research company, has awarded UniSuper a Platinum rating for its Accumulation products and Flexi Pension product. SuperRatings Infinity Recognised is awarded to super funds that clearly demonstrate excellent sustainable business practices and responsible investment principles. Go to for details of its rating criteria. SuperRatings does not issue, sell, guarantee or underwrite this product
Chant West, has awarded UniSuper a 5 Apples rating for its Accumulation products and Flexi Pension product. Further information about the rating methodology used by Chant West, see

4. Outcomes of this session
How your entitlements are taxed
Organise to replace your income
Important decisions to make now
Stay with UniSuper
Sources of further information

5. Your leaving work benefits
Employer
Superannuation
Lump sum
Access depends on your age
Pension
Lump sum
Early Retirement Scheme payment
Long service leave
Annual leave
Pension & lump sum combination

6. Early Retirement Scheme payment
Your entitlements may be based upon a combination of:
Contractual or statutory provisions of employment
Gratuity payments or payments in lieu of notice
Unused RDO’s or sick leave (if applicable)

7. Taxation of an Early Retirement Scheme payment
Based on:
The tax components of the payment
Your age
Your length of service
You will receive a quote from your employer showing the before and after tax payment

8. Taxation of an Early Retirement Scheme payment
ETP = Employment Termination Payment
49% tax
Over ETP cap of $185,000*
Under age 55
32% tax
Over age 55
17% tax
Taxable portion of ETP
Up to ETP cap of $185,000*
Tax free portion of ETP
0% tax
Relates to portion of pre 1/7/1983 service
Tax free amount*
First $9,514 +
($4,758 x complete years of service)
0% tax
* Based upon 2014/15 rates. No tax free amount if age 65 or over.

9. 2014/15 tax rates Taxable income Tax 0-$18,200 Nil $18,201 - $37,000
19c for each $1 over $18,200
$37,001 - $80,000
$3,572 plus 32.5c for each $1 over $37,000
$80,001 - $180,000
$17,547 plus 37c for each $1 over $80,000
$180,001 and over *
$54,547 plus 47c* for each $1 over $180,000
Temporary Repair Levy bill received assent in June 2014.
* Includes the 2% Temporary Budget Repair Levy applicable on taxable income in excess of $180,000

10. Tax on other payments Payments must be taken as cash
When termination is because of genuine redundancy, invalidity or early retirement scheme . . .
Type of payment
Tax deducted by employer
Long Service Leave
32%*
Annual Leave
32%
Payments must be taken as cash
* If your employer service period pre-dates 16 August 1978, you may pay less tax on the Long Service Leave portion of your payment.

11. Example 1 Net cash payment = $154,010 Sarah Age: 58
Service:
15 years & 9 months
Early Retirement Scheme payment:
$110,000
Annual Leave:
$18,000
Long Service Leave:
$54,000
ETP
$24,166
Tax on Early Retirement Scheme payment $29,116 x 17% = $4,950
Tax free amount
$80,884
Calculate Tax Free Amount
$9,514 + ($4,758 x 15) = $80,884
Annual Leave
$12,240
Tax on Annual Leave
$18,000 x 32% = $5,760
LS Leave
$36,720
Tax on Long Service Leave
$54,000 x 32% = $17,280

12. Example 2 Net cash payment = $158,650 Peter Age: 66 Service:
25 years & 2 months
Early Retirement Scheme payment:
$195,000
Annual Leave: $0
Long Service Leave:
ETP over cap
$5,100
Tax on Early Retirement Scheme payment $10,000 x 49% = $4,900
ETP under cap
$153,550
Tax on Early Retirement Scheme payment $185,000 x 17% = $31,450
Tax free amount $0
No Tax Free Amount
as over age 65

13. Income options available
You may choose to source your ongoing living needs from
Drawing on your Early Retirement Scheme lump sum
Part time / casual / contract work
Centrelink benefits
Lump sum withdrawals* from super
A pension* commenced with your super
A combination of the above
*Subject to age and work status

14. Age Pension eligibility
Current arrangements
Men
Women
Qualification Age
Date of birth
65 years
Before 1 January 1949
Age reached
1 January 1949 – 30 June 1952
Note: After 1 July 2017, the qualifying age for an Age Pension will be increasing progressively from 65 to 67 years of age.

15. Potential Centrelink entitlements
Full Age Pension
Single $ pf
Couple $1,288 pf
Age Pension
No waiting period
Must be Age Pension age
Satisfy income and assets test
Rates as at 20 September 2014
Includes supplements
Single
Couple (combined)
Fortnightly income less than
$1,868.60
$2,860
Homeowner’s assets less than
$771,750
$1,145,500
Non-homeowner’s assets less than
$918,250
$1,292,000
20 September 2014 threshold increases:
Single (Upper Fortnightly Income) from $ to $1,868.60
Single (Upper Assets) from $764,000 to $771,750
Couple (Upper Fortnightly Income) from $2, to $2,860
Couple (Upper Assets) from $1,134,000 to $1,145,500
Single Maximum Age Pension increase from $21, to $22,211.80p.a. (includes Base Pension ($ p.f.), Pension Supplement ($63.50 p.f.) and Energy Supplement ($14.10 p.f.)
Couple Maximum Age Pension increase from $33, to $33,488 p.a. combined (includes Base Pension ($ p.f. each), Pension Supplement ($95.80 p.f. combined) and Energy Supplement ($10.60 p.f. each)
1 July 2014 threshold increases:
Single (Fortnightly Income) from $156 to $160 and $ to $
Single (Assets) from $196,750 to $202,000 and $758,750 to $764,000
Couple (Fortnightly Income) from $276 to $284 and $ to $2,825.20
Couple (Assets) from $279,000 to $286,500 and $1,126,500 to $1,134,000
20 March 2014 threshold increases:
Single (Fortnightly Income) from $ to $
Single (Assets) from $748,250 to $758,750
Couple (Fortnightly Income) from $2, to $2,817.20
Couple (Assets) from $1,110,500 to $1,126,500
Single Maximum Age Pension increase from $21, to $21, p.a. (includes Base Pension ($766 p.f.), Pension Supplement ($62.90 p.f.) and Energy Supplement ($13.90 p.f)
Couple Maximum Age Pension increase from $32, to $33, p.a. combined (includes Base Pension ($ p.f. each), Pension Supplement ($94.80 p.f. combined) and Energy Supplement ($10.50 p.f. each)
20 September 2013 threshold increases:
Single (Fortnightly Income) from $1773 to $
Single (Assets) from $735,750 to $748,250
Couple (Fortnightly Income) from $2,714 to $2,769.60
Couple (Assets) from $1,092,000 $1,110,500
Single Maximum Age Pension increase from $21,018 to $21, p.a. (includes Pension Supplement and Energy Supplement)
Couple Maximum Age Pension increase from $31,689 to $32, p.a. combined (includes Pension Supplement and Energy Supplement)

16. Potential Centrelink entitlements
Full Allowance
Single $ pf
Couple $ pf each
Newstart Allowance
Under Age Pension age
Waiting period based on Early Retirement Scheme payment
Undertake Activity Test (job search, volunteer, training)
Satisfy income and assets test
Rates as at 20 September 2014
Includes Pharmaceutical Allowance
Single
Couple (combined)
Fortnightly income less than
$999
$914 each
Homeowner’s assets less than
$202,000
$286,500
Non-homeowner’s assets less than
$348,500
$433,000
20 September 2014 increases:
Single (Upper Fortnightly Income) from $ to $999
Couple (Fortnightly Income) from $ to $914
Single: $ p/f
Base Rate: $ p/f
Pharmaceutical Allowance: $6.20 p/f
Member of Couple: $ p/f
Base Rate: $ p/f
Pharmaceutical Allowance: $3.10 p/f (each)
20 March 2014 threshold increases:
Single (Fortnightly Income) from $ to $
Couple (Fortnightly Income) from $2, to $2,817.20
Single: $ p/f
Base Rate: $ p/f
Member of Couple: $464 p/f
Base Rate: $ p/f
Pharmaceutical Allowance: $3.10 p/f

17. Accessing super - preservation age
Your preservation age is one of the ‘conditions of release’ for accessing your preserved super as a lump sum or pension.
It is increasing progressively from age 55 to 60 and depends on your date of birth:
Date of Birth
Preservation
Before 1 July 1960 55
July 1960 to June 1961 56
July 1961 to June 1962 57
July 1962 to June 1963 58
July 1963 to June 1964 59
After 30 June 1964 60

18. Super preservation You may be able to access your super benefits if
Meet a condition of release
- Reach preservation age & retire;
Over age 60 & cease an employment arrangement
Over age 65
Preserved
Restricted
Non-Preserved
Leave your contributing employer OR
Meet a condition of release (above)
Unrestricted
Non-Preserved
You can access these funds at any time

19. Tax on lump sum super withdrawals
Tax Free Component
Taxable Component
Under PA* 0%
22%
Between PA* and age 59
First $185,000
Over $185,000
17%
Over age 60
* PA = Preservation Age.

20. Lump sum withdrawal example
Diane is aged 56 and decides to retire after receiving an Early Retirement Scheme package.
She wants to withdraw $220,000 from her super to repay her mortgage.
Her super has the following components:
Tax free $50,000
Taxable $450,000
How much tax will she pay?
For this withdrawal, 10% is tax free ($50,000/$500,000)
Components of $220,000 withdrawal:
Tax free $22,000
Taxable $198,000
Tax on taxable component:
= ($198,000 - $185,000) x 17%
= $2,210

21. UniSuper pensions UniSuper offers three styles of pensions:
Flexi Pension
Commercial Rate Indexed Pension
Defined Benefit Indexed Pension – restricted to Defined Benefit Division (DBD) members who joined the Defined Benefit Division prior to 1 July 1998

22. Commercial Rate Indexed Pension Defined Benefit Indexed Pension
UniSuper Pensions
Flexi Pension
Commercial Rate Indexed Pension
Defined Benefit Indexed Pension
Investment choice  
How is your annual pension calculated?
Member nominates pension amount (subject to annual minimum)#
Fixed CPI indexed pension based on initial sum invested
Fixed CPI indexed pension based on Trust Deed factors
Can you make lump sum withdrawals? #
How long will the pension last?
Until the account balance is zero
Lifetime
(10-year guarantee period)
What benefits are paid when you die?
Remaining account balance paid as either a reversionary pension to spouse or child or lump sum to beneficiaries
Joint pension paid to surviving spouse, or sum within guarantee period
To surviving spouse only (or dependent children)
# Restrictions apply when taking a pension under transition to retirement rules

23. Tax on Pensions Super Pension Annual pension income Under age 60
Investment earnings
15% 0%
Annual pension income
Under age 60
Age 60 and over
Taxable proportion
Marginal tax rate
(less 15% tax offset) 0%
Tax-free proportion

24. Tax on pensions
Compare earnings of $50,000 p.a. as ordinary income versus pension income when under the age of 60
Ordinary income
Pension income
Other taxable income
$50,000 -
Pension income (100% taxable)
Taxable income
less tax*
($7,797)
plus tax offset for pension
(15% x $50,000)
$7,500
Net income after tax
$42,203
$49,703
Medicare levy **
($1,000)
* Based on 2014/15 tax rates and does not include any tax offsets which may be available.
** Medicare levy has been included; however, the amount payable can vary between taxpayers depending on their own incomes, their combined family incomes & the number of dependent children (if any).

25. What happens when I leave my employer?
Your employer will notify UniSuper that you have left
Information pack on your UniSuper Benefit and Options
automatically sent by UniSuper
If a Defined Benefit Division member, you have 90 days from your employment finish date to let UniSuper know what you would like to do with your benefits

26. The first 90 days are important
Get new employment
Withdrawal
Stay a member of the DBD (benefit growth limited – age factor only)
Possibly re-activate DBD membership at a later date
Retain eligibility for DB Indexed Pension
Defined Benefit Division (DBD) members
Defined Benefit Indexed Pension (if eligible)
Commercial Rate Indexed Pension
Flexi Pension
Participating employer – DBD can continue (inside 90 days only)
Other employer – choice means you stay with UniSuper (only accumulation account)
Open a UniSuper pension (subject to age & work status)
DBD benefit is transferred to an Accumulation 1 account
Investment choice now important
Withdrawal (lump sum if eligible)
Rollover to another fund
Defer DBD membership
Do nothing
All of the options can affect your benefit entitlements and insurance cover. You should seek advice as to your appropriate level of cover.

27. The first 90 days are important
Get new employment
Withdrawal
Participating employer – Accumulation 2 can continue
Other employer – choice means you stay with UniSuper (Accumulation 1 account)
Accumulation 2 members
Commercial Rate Indexed Pension
Flexi Pension
Accumulation 2 benefit is transferred into an Accumulation 1 account
Withdrawal (lump sum if eligible)
Rollover to another fund
Open a UniSuper pension (subject to age & work status)
Do nothing
All of the options can affect your benefit entitlements and insurance cover. You should seek advice as to your appropriate level of cover.

28. What if I start a new job? In the higher education and research sector
You can provide your UniSuper membership number for future contributions
Outside the higher education sector
You have the option to elect UniSuper as your preferred super fund
If so desired, complete the Choice of Fund forms and provide to your new employer

29. Your UniSuper membership advantages
Keep in mind that no matter what your next step is, you can remain a UniSuper member and benefit from:
competitive fees
a choice of investment options
insurance cover (if applicable)
access to UniSuper’s pension products
personal advice from UniSuper Advice (at competitive fee for service rates)

30. How UniSuper can help UniSuper offers 3 levels of advice:
General Advice (phone-based)
Not specific to your personal situation
Limited Advice (phone-based)
Single issue personal advice specific to your situation
Comprehensive Personal Advice (face to face)
Full personal advice covering multiple issues specific to your situation

31. How UniSuper can help
A UniSuper Private Client Adviser can help give you peace of mind
The advice is charged at an hourly rate, with no commissions paid
There is no charge for the first appointment
Call UniSuper Advice today on for a complimentary initial assessment on the level of advice that might suit you

32. Need more information?
Read through your Benefit Options pack and information
UniSuper’s website
Call the UniSuper Helpline –
Contact Centrelink’s Financial
Information Service

33. Any questions?

34. Appendix Further detail on UniSuper Pensions

35. Flexi Pension account-based pension
minimum commencement sum of $25,000
able to withdraw lump sums (commutation).
You decide:
how it is invested – choice of investment option(s)
payment frequency (fortnightly, monthly, quarterly, bi-annually or annually)
pension amount (subject to minimums).

36. Flexi Pension
The minimum pension is calculated upon commencement and at 1 July each year thereafter.
It’s based on your age and account balance.
Age
% factor (2014/15)
55 – 64 4%
65 – 74 5%
75 – 79 6%
80 – 84 7%
85 – 89 9%
90 – 94
11%
95+
14%
Example:
On 1 July 2014, Carol is aged 66 and has an account balance of $400,000.
Her minimum pension for 2014/15 is $20,000 (i.e. $400,000 x 5%)
Carol nominates to receive a pension of $2,200 per month ($26,400 p.a.)

37. Commercial Rate Indexed Pension
Lifetime pension purchased using super balance (minimum of $25,000)
Monthly pension indexed in line with the Consumer Price Index (CPI) each July
10-year guarantee period
Pension quote is based on interest rate and age factors.
You decide:
between a single or joint life pension
if joint, reversionary pension of 100%.

38. Defined Benefit Indexed Pension
Restricted to DBD members prior to 1 July 1998
Lifetime pension based on Trust Deed factors
Monthly pension indexed in line with the CPI each July
Spouse reversionary pension of 62.5%
No residual capital to estate (if not survived by a spouse).
You decide:
whether to take part of the pension as a lump sum prior to commencement.