How does the Lifetime Income Fund work?

When you invest in our Lifetime Income Fund, your savings are invested into a fund which is designed to grow your nest egg and make it last as long as possible.

On top of that, your retirement income is insured so that it lasts as long as you do. You don’t need to worry about stock market crashes or low interest rates affecting it.

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Investment returns from the Fund are added to your account whilst fees, tax, lifetime income insurance premiums and your fortnightly retirement income payments are deducted. We pay tax on your behalf at your normal PIR tax rate.

Even if your regular retirement income payments deplete your savings in the Fund, it doesn’t mean you’ll run out of income.

Your income is insured by Lifetime Income Limited to make sure your income keeps getting paid to you for the whole of your life.

With our Lifetime Income Fund, you know that you’ve got money coming in every fortnight to pay the bills and enjoy yourself, just like when you were working.

If you need to withdraw some, or all, of your remaining savings down the track, you can. It’s your money and it’s always available to you.

You can make a partial withdrawal subject to your withdrawal being at least the smaller of $10,000 or 5% of your Protected Income Base. However, you must retain a minimum account balance of at least $25,000. If your partial withdrawal will result in an account balance lower than $25,000, we’ll either decline it or process your request as a full withdrawal at our discretion. There is no limit on the number of partial withdrawals you can make from the Fund but your insured income will be reduced proportionately by all amounts withdrawn. The Protected Income Base concept is explained on page 12 of Lifetime Income Brochure.

If you pass away, any remaining balance will go to your estate.

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When can you invest?

You can invest into the Lifetime Income Fund at any time by making one or more lump sum investments. The minimum amount of any lump sum investment is $25,000 and the maximum total investment permitted is $1,000,000.

 

What will your retirement income be?

Your investment is made into the Lifetime Income Fund which has around 50% of its assets invested in income assets (cash and fixed income) and around 50% invested in growth assets (equities). The initial amount of money you invest is called your Protected Income Base (PIB). Your insured retirement income is a percentage of your PIB.

We review your PIB annually on the anniversary of your initial investment. If at that date, your investment account balance has increased, we will increase your PIB to match it. However, if your investment account balance falls, your PIB will remain the same. This means that, unless you make a partial withdrawal, your insured retirement income can rise but cannot fall, regardless of what happens in the markets.

Your insured retirement income rate is based on your age when you first start receiving income payments. For example, it could be 3.60% pa (after fees and tax) if you start to receive your income at age 65. Your applicable Retirement Income Payment Rates are set when you obtain a quote to join the Lifetime Income Fund.

You can also choose to have your regular retirement income payments indexed in line with movements in the consumer price index (inflation).

Selecting an inflation option means your initial retirement income payments will commence at a lower level than you would otherwise have been entitled to. However, indexation will be applied to revise your retirement income payment amounts from 1 May each year based on inflation to 31 March of that year. If you wish to consider this option, which is only available at the time you commence taking your retirement income payments, we will need to calculate an individualised payment rate for you.

Example One

In the example below, you invest $100,000 on 1 January 2020 and your PIB is set at $100,000 on that date.

On the first anniversary of your investment (i.e. 1 January 2021) your account balance has grown to $102,000 so your PIB is reset to that higher level. If you are aged 60 or older, you can start taking your retirement income now and your income payments will be based on your PIB of $102,000.

You decide to wait. On the second anniversary of your investment (i.e. 1 January 2022) your account balance has fallen to $98,000. However, your PIB remains at $102,000 because your PIB is insured, meaning that unless you make a withdrawal, it can rise but cannot fall. If you start taking your retirement income now, your income payments will be based on your PIB of $102,000.

Example Two

The graph below shows how, during the period from when you start investing in the Fund until you commence taking retirement income payments, your Protected Income Base (which is the balance on which your insured income is calculated) is locked in each year. You will see that it rises with positive returns but it cannot fall unless you make a withdrawal.

Example 2 Graph

What could your retirement income be?

Current fixed Retirement Income payment rates, the age you choose to start receiving your Retirement Income (and whether you have made any withdrawals) determines the amount you will be paid fortnightly (your Payment Rate).

Your fortnightly Payment Rate for your Retirement Income is calculated based on a fixed annual percentage of your PIB. Your Payment Rate will depend on (i) the fixed Retirement Income payment rates offered when you join the Lifetime Income Fund (your Payment Schedule) and (ii) your age when you first receive your Retirement Income.

Further Payment Rate information is available on request. Your fixed Retirement Income Payment Schedule will be agreed with you when you join the Lifetime Income Fund.

Why invest in our Lifetime Income Fund?

A Dependable Income For Life

You know you’ve got money coming in every fortnight to pay the bills, just like when you were working.

Protects Your Downside

The Lifetime Income insurance means you don’t need to worry about stock market crashes or low interest rates affecting your income.

Your Money Is Always Yours

If you need to withdraw some, or all, of your savings down the track, you can. There are no withdrawal fees. If you pass away, any remaining balance will go to your estate.

Licensed and Regulated Operators

The insurer, Lifetime Income Limited, is licensed and regulated by The Reserve Bank of New Zealand.

The Lifetime Income Fund is a part of the Britannia Retirement Scheme which is regulated by the Financial Markets Authority, managed by Britannia Financial Services Limited and supervised by The New Zealand Guardian Trust Company Limited.

It's Designed To Be Easy

Your retirement income payments are paid into your bank account after fees and tax every fortnight. We take care of any tax filings.

FIND MORE INFORMATION ABOUT

Britannia’s Lifetime Income Fund

LIFETIME INCOME FUND

What is the Lifetime Income Fund?

LIFETIME INCOME FUND

Case Studies

LIFETIME INCOME FUND

Lifetime Income Fund Calculator

Disclosure Statements for our Authorised Financial Advisers are available on request and free of charge. Product Disclosure Statements for the Britannia Retirement Scheme and the Integral Master Trust are available from the schemes’ issuer, Britannia Financial Services Limited, phone 0800 500 811.

Need help in securing your financial future?
Call us 0800 28 28 33