Assumptions

Editable assumptions

The results produced by this calculator are based on various underlying assumptions. You can change the value of the following important assumptions. For more detail, please see the notes below.

Notes

There are several assumptions which have been made and support the basis of all calculations. These are as follows:

General Wage Inflation: By default, wages are assumed to increase by 3.2% p.a. over the projection period. All results are expressed in today’s dollars by discounting at this rate.

This calculator relies on the exemptions under ASIC Corporations (Generic Calculators) Instrument 2016/207 and does not advertise or promote a specific financial product. Rice Warner online calculators use an assumed wage inflation rate of 3.2% to calculate the present value of estimates. Rice Warner views this as a suitable assumption as at 6 October 2020 and advises that this inflation rate of 3.2% includes a component of 1% that reflects the cost of meeting increases in community living standards.

Personal Income: Your salary is assumed to increase at the assumed level of general wage inflation. Income tax is calculated by applying personal income tax rates plus the Medicare Levy (but not the Medicare Levy Surcharge) to your projected taxable income in each projection year. The personal income tax rates used for the 2020/21, 2021/22, 2022/23, 2023/24 and 2024/25 projection years are the legislated tax rates for those years as at 1 July. In each projected year subsequent to 2024/25, the personal income tax brackets (and Medicare Levy thresholds) are assumed to increase in line with the assumed level of general wage inflation, and the personal income tax rates are assumed to remain unchanged. You are assumed to be an Australian resident for taxation purposes. In calculating the Medicare Levy, the individual income thresholds are assumed to apply, and the family income thresholds are assumed not to apply. No allowance is made for the Mature Age Worker Tax Offset.

The Medicare Levy is assumed to be 2% of taxable income for the 2020/21 tax year and subsequent years.

In each projection year, your entitlement for the Low Income Tax Offset (LITO) is estimated based on your taxable income. The rates and thresholds used to calculate LITO in the 2020/21 projection year are assumed to be the legislated rates and thresholds as at 6 October 2020. The maximum amount of LITO and the income threshold over which the LITO starts to reduce are assumed to increase each year subsequent to 2020/21 in line with the assumed level of general wage inflation.

In each projection year in which you are determined to be eligible for an Age Pension, your entitlement for the Seniors and Pensioners Tax Offset (SAPTO) is estimated based on your rebatable income. Your rebatable income is assumed to equal your taxable income plus any salary sacrifice contributions. The maximum amount of SAPTO is assumed to increase each year in line with the assumed level of general wage inflation.

If you indicate you work part-time while taking a break from full-time work, it is assumed your gross salary and superannuation contributions during the part-time period are the same proportion of your full-time gross salary and superannuation contributions as your part-time work bears to your full-time work.

Contributions: By default it is assumed you receive employer contributions of 9.5 percent of salary, subject to a maximum of the concessional contribution limit. You can change the assumed employer contribution rate. By default, in each projection year, your Superannuation Guarantee (SG) entitlement is estimated and your employer's contribution is increased to your estimated SG entitlement if below this entitlement. You can disable this functionality at the top of this page. Your SG entitlement is calculated in each projection year by multiplying the SG charge rate assumed to apply in that year by an income base. By default, the income base is your projected salary (before tax), but you can elect to cap this at the SG Maximum Contribution Base, by changing the "Apply SG Maximum Superannuation Contribution Base?" setting at the top of this page. The SG charge rates assumed to apply in each year are as follows:

In addition you should enter your current level of after-tax (non-concessional) and salary sacrifice (concessional) contributions. It is assumed that your employer contributions are not affected by any salary sacrifice contributions.

Any contributions entered by the user (both employer and personal contributions) are assumed to increase in each year in line with salary. Where a calculated Concessional or Non-concessional contribution amount exceeds the corresponding legislated contribution cap, the contribution is reduced to the applicable cap so that you do not make an excessive contribution. The concessional and non-concessional contributions limits of $25,000 and $100,000 respectively are subject to indexation. The general transfer balance cap starts at $1.6 million for 2017/18, and will be indexed in line with the consumer price index (CPI), rounded down to the nearest $100,000. Contributions are assumed to be spread evenly across the year on a monthly basis.

Contributions tax: Concessional contributions are assumed to be subject to tax at 30% in the super fund for individuals with income including concessional contributions over $250,000, and at 15% otherwise. Where an individual’s income exceeds $250,000 a year due to the inclusion of their concessional contributions, the higher tax rate of 30% is assumed to apply to the excess over $250,000, with 15% applying to the balance of concessional contributions.

Investment Earnings: The calculator assumes the following rates of investment earnings and tax for each investment strategy.

The earnings and tax rates listed above are illustrative only and should not be taken to provide an estimate of the amount of investment earnings you may receive or the tax you may pay.

The assumed earning rates are based on the expectation of asset consultants of the long-term future return on the assets in which each option is invested. With the exception of cash, the tax rates assumed for the superannuation account are less than the maximum 15% levied on superannuation income. This allows for the effect of capital gains tax concessions and dividend imputation of Australian Shares investments.

Your balances are assumed to be invested in the chosen pre-retirement investment strategy up to retirement age, and then switched to the after-retirement investment strategy. When changing investment strategies, it is assumed that no transaction costs are incurred and that this does not give rise to a capital gains tax event.

Fees and Insurance Premiums: By default, fees and insurance premiums are assumed to be as follows. You can change the values used at the top of this page.

Fees are assumed to be tax-deductible at 15% in the fund. Contribution fees are deducted at the time of contribution. Other fees and insurance premiums are deducted on a monthly basis.

Dollar fees and insurance premiums are assumed to increase in line with the assumed level of general wage inflation. Other fees are assumed to remain constant in percentage terms over the projection period.

Co-contributions: For each projection year in which it is assumed you would make an after-tax (non-concessional) contribution, your co-contribution eligibility is assessed and a co-contribution is added to the projected superannuation account if applicable.

In each case, your eligibility is assessed by comparing your calculated assessable income amount plus salary sacrifice contributions in the relevant year to the estimated co-contribution thresholds in that year, and applying the standard rules for calculating the co-contribution. It is assumed you have no reportable fringe benefits.

It is assumed you meet the other co-contribution eligibility criteria.

The lower co-contribution threshold is assumed to increase in line with the assumed level of general wage inflation each year. The co-contribution matching rate is assumed to be 50c per dollar contributed and the maximum co-contribution is assumed to be $500. The upper co-contribution threshold is assumed to be $15,000 more than the lower co-contribution threshold.

Any co-contribution payable is added to your projected superannuation account on 30 June in the respective projection year.

Low income superannuation contribution (LISTO): For each projection year on or after 1 July 2020, in which it is assumed you or your employer would make a concessional contribution, your eligibility for the LISTO is assessed and a LISTO is added to the projected superannuation account if applicable.

In each case, your eligibility is assessed by comparing your calculated adjusted taxable income in the relevant year to the LISTO income threshold, and applying the standard rules for calculating the LISTO. It is assumed you have no reportable fringe benefits and that you meet the other LISTO eligibility criteria.

The LISTO income threshold and maximum payment amount are assumed to remain constant over the projection period.

Any LISTO payable is added to your projected superannuation account on 30 June in the respective projection year.

Pension Withdrawals: You are assumed to commence an account-based pension at the start of the first projection year, as well as at the time of full retirement. Pension withdrawals are assumed to be made on a monthly basis. It is assumed that you will not make any lump sum withdrawals.

Transfer Balance Cap: In cases where the superannuation balance at retirement is projected to exceed $1.6 million (in todays dollars):

• The excess balance is transferred into an accumulation account.
• The investment strategy for this account is assumed to be the same as for the pension account. However, earnings on this balance are subject to taxation.
• It is assumed that the minimum drawdown is taken from the pension balance.
• Any shortfall to the desired retirement income is drawn from the accumulation account first.

Life Expectancy: The Australian Life Tables 2015-17 is assumed to represent your expected mortality experience for the purposes of calculating your life expectancy and other percentile points of your future lifetime.

Centrelink: It is assumed that you are eligible for the Age Pension at the single rate from qualifying age, based on the gender and date of birth you have entered, subject to the income and assets tests. No allowance has been made for any non-superannuation assets or any income other than the calculated amount of salary and deemed income from your pension account. No allowance has been made for any social security entitlements other than the Age Pension.

General: It is assumed that you have provided your tax file number to the fund.

The projections which you generate when you use the calculator indicate how much could be saved through superannuation up to eventual retirement and illustrate the general effect of fees over the course of your working life. The figures are based on assumptions and are GENERAL ILLUSTRATIONS ONLY. You should refer to the "Assumptions" link to verify that the assumptions reflect your personal situation and the circumstances of the funds you are comparing. The projections are not intended to constitute or be a substitute for financial product advice given by a licensed financial adviser. They do not make any allowable for tax on benefit payments.

NOTE: All references in this page to "VISSF" are to The Victorian Independent Schools Superannuation Fund ABN 37 024 873 660 AFSL 235097.

VISSF and its related companies specifically disclaims any liability (whether based in contract, tort, strict liability or otherwise) for any direct, indirect, incidental, consequential, or special damages arising out of or in any way connected with the access to or use of this calculator.

Other than is required under consumer protection law, under no circumstances will VISSF and its related companies be liable for any loss or damage caused by a user's reliance on information obtained by using this calculator.

You should not make any decisions on the information contained herein without first consulting with your licensed financial adviser.

This calculator is not intended to be relied on for the purposes of making a decision in relation to a financial product, including a decision in relation to a particular superannuation fund or strategy. You should consider obtaining advice from an AFS licensee before making any financial decisions.

The default inflation and fee assumptions used in the calculator are provided by Rice Warner Pty Ltd, ABN 35 003 186 883 AFSL 239 191. VISSF will arrange for these rates to be reviewed regularly to ensure they remain appropriate for the purposes of this calculator but makes no representation that the assumptions will be reasonable at all times between reviews.

This calculator is not intended to be relied upon when making financial decisions. You should consider seeking professional advice before making any decision. The results which you generate when using the calculator are dependent on the variables you input and the assumptions made by the calculator. As the variables and assumptions are unlikely to match your situation precisely, the results will not be accurate.

The assumptions made by the calculator, and their limitations, are explained in here. We believe the assumptions (leaving aside the ones you input) are reasonable overall. A complex range of circumstances can impact on the calculations and it is necessary to take these into account to some extent. Given the calculator's purpose is to generate general illustrations and not accurate predictions, we think it is reasonable for the calculator to simplify reality. As these assumptions will be the same for any calculation, when you change a variable the result will be a reasonable illustration of the impact of that particular variable change. Some assumptions are conservative estimates of likely scenarios. The inflation assumption is based on recent inflation rates. We have received actuarial advice that the assumptions are appropriate.

You should consider the product disclosure statement for a fund and your personal circumstances in order to decide whether a fund is suitable for you. A PDS for VISSF funds can be obtained here or by calling 1300 660 027.

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