ESSSuper Income Streams Product Disclosure Statement
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ESSSuper Income Streams Product Disclosure Statement For all ESSSuper members Proudly serving our members Issued 19 October 2021 Issued by: Emergency Services Superannuation Board ABN 28 161 296 741 (Board) as Trustee of the Emergency Services Superannuation Scheme ABN 85 894 637 037 (Scheme)
We’re one of Australia’s largest super funds with more than
128,000 members and over $35 billion in assets as at 1 July
2021. We provide pre and post retirement solutions to Victorian
emergency services and state government employees.
“We’re proud to be the dedicated, not-for-profit super fund
serving Victorian emergency services and state employees.”
Important notice About this Product
The information provided in this Product Disclosure Disclosure Statement
Statement (PDS) is general information only and does not
This is the PDS for ESSSuper’s Working Income Stream
take into account your financial situation and needs. You
and Retirement Income Stream.
should consider the appropriateness of this information
to your circumstances, carefully read this PDS (and any It will help you understand the benefits and conditions of
additional documents referred to in this PDS) and obtain a Working Income Stream and Retirement Income Stream.
financial advice before making any decision about
whether to acquire the product. The Board is not licensed The benefits in ESSSuper’s Income Streams are not
to provide financial product advice concerning an guaranteed or underwritten by the Victorian Government
interest in ESSSuper. This PDS is only available to persons or the Emergency Services Superannuation Board.
receiving it in Australia (electronically or otherwise).
The information in this PDS is up to date as at the issue
date and may change from time to time. Changes that
are not materially adverse are available by visiting our
website or contacting us as indicated on page 3. On
request a paper copy will be given to a person without
charge.
How to contact Contents
ESSSuper Introduction4
Our Member Service Centre can assist you with all About ESSSuper’s Income Streams 4
enquiries regarding your membership. If you want to How an Income Stream works 6
discuss any aspect of your membership, or you want to Investing in an ESSSuper Income Stream 8
make an appointment for an individual consultation, you
can call us between 8.00 am and 5.00 pm Monday to Benefits10
Friday. Payment of benefits 10
Investment choice 17
ESSSuper’s contact details are:
Investment principles 17
Website esssuper.com.au Different types of investment 17
What are the risks? 18
Email info@esssuper.com.au
Things to consider when selecting investment options 20
Telephone 1300 650 161 Need help with your super? 21
(for emergency services members)
Investment options 22
1300 655 476
(for state super members) Other important investment information 28
Taxation31
Postal address GPO Box 1974
Melbourne Victoria 3001 Taxation of benefits 32
Street address Level 16, 140 William Street Fees and other costs 35
Melbourne Victoria 3000 Additional explanation of fees and costs 38
Additional fees and costs 40
Defined fees and costs 41
Other information 44
Complaints handling 45
Keeping you informed 46
Glossary47
How to open an account 49
ESSSuper Income Stream checklist 49
Forms50
3
Introduction
We’re one of Australia’s biggest super funds with more A Working Income Stream can be used to transition to
than 128,000 members and over $35 billion in assets as retirement in a number of ways. For example, you may be
at 1 July 2021. We’re proud to be the dedicated, able to:
not-for- profit super fund serving Victorian emergency
{{switch to part-time work and receive ESSSuper
services and state employees.
Working Income Stream payments so you don’t have
to reduce your income, or
About ESSSuper’s {{continue your current working hours and get the
Income Streams tax benefits of salary sacrificing into your super fund
(subject to contribution caps). So, although you are
drawing down from part of your super with your
ESSSuper offers two income stream options. The Working
Working Income Stream, you are topping up as you go.
Income Stream is designed for current or former Victorian
emergency services employees, State Super members To be eligible you must have reached your preservation
or their spouses (including de facto couples) in the age but not have retired. There are restrictions on the
Transitioning to retirement lifestage (have met preservation amount of income you can withdraw (see page 10 of
age (but are under 65) that are still employed (full time or this PDS) and it is not possible to withdraw a lump sum
part time)) who wish to supplement their income. amount except in limited circumstances. When you meet
a condition of release (e.g. permanently retire) you can
The Retirement Income Stream is designed for current or
convert your Working Income Stream to a Retirement
former Victorian emergency services employees, State Super
Income Stream which will allow lump sum withdrawals.
members or their spouses (including de facto couples) in
These conditions are set out in the ‘Commutations’ section
the retired life stage (no longer working) that wish to draw a
on page 11.
regular income.
ESSSuper recommends that you speak with a licensed
For more information about who these products are
financial adviser before deciding whether a transition to
appropriate for (target markets), and any conditions around
retirement strategy using an ESSSuper Working Income
how these products can be distributed to members, please
Stream is appropriate for you.
visit esssuper.com.au/pds
In this PDS, you will find important information about these Retirement Income Stream
options to help you determine whether these income
streams meet your retirement, or transition to retirement ESSSuper’s Retirement Income Stream can provide a
needs. regular income for ESSSuper members who have attained
their preservation age and permanently retired from the
workforce, or have reached age 65 or have met another
Working Income Stream
condition of release. Members with an unrestricted non
ESSSuper’s Working Income Stream can provide a regular preserved benefit can also use that benefit to acquire
income to eligible ESSSuper members who have reached a Retirement Income Stream. It enables members to
their preservation age but wish to continue to work either continue to invest some or all of their superannuation
in a full or part-time capacity. benefit with ESSSuper and continue to benefit from the
If you are an ESSSuper defined benefit member and wish concessional tax treatment for retirement savings.
to commence a Working Income Stream, please contact us ESSSuper’s Retirement Income Stream has been designed
to better understand your options and entitlements. to mirror the terms of an Account Based Pension as set
ESSSuper’s Working Income Stream has been designed out in the Superannuation Industry (Supervision) Regulations
to mirror the terms of a Transition to Retirement Account 1994. This type of product can only be acquired if you have
Based Pension as set out in the Superannuation Industry satisfied a condition of release.
(Supervision) Regulations 1994.
4
The benefits and risks of investing {{your choice of fortnightly, monthly, quarterly, six-
in an Income Stream monthly or annual payments made direct to your
nominated bank account, with the ability to increase
Benefits in line with inflation
ESSSuper’s Income Streams are investment vehicles which {{a choice of investment strategies and the ability
enable you to convert your superannuation benefit into to change your investment choice to suit your
a regular income stream and defer any lump sum tax that personal circumstances
may be payable*. Subject to maximum and minimum {{the ability to make lump sum withdrawals (called
limits set by superannuation law, you can nominate the commutations) at any time using Members Online
amount of income you want to receive each year. account access
* Members transferring their ‘untaxed’ optional benefit from the {{the ability to nominate a reversionary beneficiary to
Beneficiary Account will have tax deducted from that benefit receive income payments in the event of your death
before it is transferred.
{{the option to make either a binding beneficiary
The Working Income Stream is an easy and convenient way nomination or a non-binding beneficiary nomination
to receive a regular income payment while you continue to as to who you wish to receive your lump sum benefit in
work. It offers: the event of your death (if no reversionary beneficiary
{{a low-cost flexible income stream income payment is nominated)
{{your choice of fortnightly, monthly, quarterly, six- {{the option to stop your payments and withdraw your
monthly or annual payments made direct to your investment as a lump sum or roll it over to another
nominated bank account, with the ability to increase Account Based Pension or superannuation fund.
in line with inflation Risks
{{a choice of investment strategies and the ability to
The Income Streams may not provide an income for the
change your investment choice to suit your personal
rest of your life. Payments will only continue to be made
circumstances
until your account balance has been exhausted.
{{the option to nominate a ‘reversionary beneficiary’ to
receive income payments in the event of your death You also need to be aware that your account balance is
determined by the amount invested, the investment returns
{{the option to make either a binding beneficiary
earned by your investment choice options (including any
nomination or a non-binding beneficiary nomination
negative returns), the Income Stream’s fees and taxes, and
as to who you wish to receive your lump sum benefit in
how much income has already been paid to you.
the event of your death (if no reversionary beneficiary
income payment is nominated) Superannuation is a long term investment and a person
{{the option to roll over to a retirement income stream who leaves the fund shortly after joining may get back less
pension that falls under the definition of a Transition to than the amount paid in because of the level of investment
Retirement Account Based Pension returns and the effect of fees, costs and taxes.
{{the option to stop your payments and roll your The benefits in the ESSSuper Income Streams are not
investment over to the ESSSuper Accumulation Plan or guaranteed or underwritten by the Victorian Government
another superannuation fund. or the Board.
The Retirement Income Stream is an easy and convenient For more information about investment risk, refer to pages
way to convert your superannuation lump sum into a tax 18-19.
effective regular income in retirement. It offers:
{{a low-cost, flexible and tax-effective income stream
in retirement
5
Getting financial advice The diagrams below show how a Working Income Stream
and a Retirement Income Stream might operate:
If you need personal financial advice that is tailored to your
individual circumstances, you should seek advice from a Working Income Stream
licensed financial adviser.
ESSSuper has an arrangement with Link Advice Pty Ltd
(Australian Financial Services Licence (AFSL) No. 258145) ROLLOVER
SUPERANNUATION INVESTMENT
(Link Advice) under which Link Advice and its authorised SAVINGS RETURNS
Positive
representatives may provide you with fee-for-service
(commission free) financial product advice.
This means you only pay for the time it takes to provide
you with the advice or to complete a financial plan.
Under this arrangement, Link Advice authorises certain
qualified ESSSuper financial advisers to provide financial
$
product advice to ESSSuper members. Although these
financial advisers are employed by ESSSuper, the advice YOUR INCOME
will be provided under Link Advice’s AFSL and Link Advice STREAM ACCOUNT
is responsible for the financial advice services provided REGULAR INCOME
INVESTMENT PAYMENTS TO YOUR
to you. ESSSuper pays Link Advice a fee for this service. RETURNS BANK ACCOUNT
Negative
However, neither the Board, ESSSuper nor the Victorian FEES AND
15% TAX ON COSTS
Government guarantee or endorse any advice given by INVESTMENT RETURNS
Link Advice or its authorised representatives.
A qualified financial adviser can provide financial advice
−
specific to your personal needs, goals and financial
situation. They can also work with you to develop a tailored
plan to help you reach your retirement goals. Retirement Income Stream
For more information about our financial advice arrangements,
please visit our website at esssuper.com.au/advice or call our
ROLLOVER
Member Service Centre. SUPERANNUATION INVESTMENT
SAVINGS RETURNS
Positive
How an Income Stream works
An Income Stream allows you to convert your superannuation
savings into a flexible income tailored to your lifestyle needs.
To invest in a Working Income Stream or Retirement Income
$
Stream, you must invest a minimum superannuation benefit
of $50,000*. For a Working Income Stream you must have YOUR INCOME
reached your preservation age. In the case of the Retirement STREAM ACCOUNT
Income Stream, you must have permanently retired from the REGULAR INCOME
INVESTMENT PAYMENTS TO YOUR
workforce after reaching your preservation age, reached age RETURNS BANK ACCOUNT
Negative
65 or met another condition of release, and any benefit you LUMP SUM
FEES AND WITHDRAWALS
wish to use for this product must not be preserved. COSTS (COMMUTATIONS)
AS NEEDED
* Special consideration may be given to accepting deposits below
$50,000 in exceptional circumstances.
6Preservation age
WARNING:
Generally, you can only withdraw your preserved benefit Closing and restarting an existing Income
when you reach your preservation age as outlined below Stream account may affect your Centrelink or
and permanently retire from the workforce. Department of Veteran’s Affairs (DVA) payments.
Contact Centrelink, DVA or seek advice from
Date of birth Preservation age a financial adviser before closing or restarting
any existing Income Stream account.
Before 1/7/1960 55
1/7/1960 – 30/6/1961 56
1/7/1961 – 30/6/1962 57
1/7/1962 – 30/6/1963 58 Transitioning from a Working Income
1/7/1963 – 30/6/1964 59 Stream to a Retirement Income Stream
1/7/1964 or after 60 When you reach age 65, we will automatically transfer you
from a Working Income Stream to a Retirement Income
Generally, you meet a condition of release when: Stream effective from the first day of the month following
{{you permanently retire from the workforce on or after your 65th birthday.
your preservation age If you meet any other conditions of release, you will need
{{you have reached your preservation age and you to notify us. If we receive your notification by close of
commence a transition to retirement income stream business on the last business day before the 21st day of
{{you cease employment on or after age 60 the month, you will be switched from a Working Income
{{you reach age 65 Stream to a Retirement Income Stream. This will be
{{you become permanently incapacitated at any age
effective from the first day of the month following receipt
of a valid condition of release. For example, if we receive
{{you suffer from a terminal medical condition
notification of a valid condition of release by 20 June, you
{{you meet tightly restricted compassionate grounds or
will be switched to a Retirement Income Stream effective
financial hardship, or 1 July.
{{you die.
However, if we receive notification after the 20th day of
Payments are made regularly into your nominated bank the month, you will be switched from a Working Income
account. Each year you can nominate the amount of Stream to a Retirement Income Stream effective from
income you wish to receive, as long as it is within the limits the first day of the month following the next month. For
set by superannuation law (refer to Income Payments on example, if we receive notification of a valid condition of
pages 10 to 12). release on 23 June, you will be switched to a Retirement
Income Stream effective 1 August.
Note:
If you have an unrestricted non preserved The balance that is transferred to the Retirement Income
component you may make lump sum Stream will count towards your personal transfer balance
withdrawals from your Working Income Stream cap. For more information on this, see the ‘Taxation’ section
account using Members Online account access on page 31.
at any time up to the value of that unrestricted
non preserved component.
7Investing in an ESSSuper this document) or you can apply to add to and consolidate
your Income Stream account at any time using the Restart
Income Stream my Income Stream account form (ES173) available from
our website at esssuper.com.au/forms or by calling our
To invest in an ESSSuper Income Stream, you can complete Member Service Centre.
the Income Stream Application Form (ES176) online by Before completing these forms you should carefully read
logging into your Members Online account at this Product Disclosure Statement.
esssuper.com.au/login. Alternatively, you can complete
the form accompanying this document and post it to us.
This is in addition to any forms you may need to complete Eligibility to invest
to transfer or rollover your benefit from another ESSSuper The Income Streams are for current and former Victorian
account.
emergency services employees, state super members
Once an Income Stream commences, legislation prevents and their spouses.
ESSSuper from accepting further deposits into that
Income Stream.
Working Income Stream
If you would like to add personal after-tax contributions* to
your ESSSuper Income Stream at the time of commencing The ESSSuper Working Income Stream accepts transfers
or restarting your account, personal contributions must be and rollovers of lump sum superannuation benefits
paid into an Accumulation Plan account first. These funds (including accumulation products as well as lump sum
can then be rolled over into an income stream. deferred benefits). In this instance you do not have to
have retired from the workforce, however, you must have
*The Government has set a cap on the amount of non-
concessional contributions you can make in a financial year before
reached your preservation age (55 or over depending on
additional tax applies. Please refer to the How Super is Taxed guide your date of birth) - see the table on page 7. You must also
(AP.4) in the Accumulation Plan PDS available on our website at be under age 65 to acquire a Working Income Stream.
esssuper.com.au/pds, for further information. The minimum investment to start your ESSSuper Working
Income Stream account is $50,000*.
If you are transferring or rolling over from another fund,
you can login to your Members Online account at
esssuper.com.au/login. Alternatively, you can complete the Retirement Income Stream
Transfer Your Super form (ES104) which is also available from
The ESSSuper Retirement Income Stream can be acquired
our website at esssuper.com.au/forms
using rollovers of the unrestricted non preserved portion of a
If you have advised us on the Income Stream Application Form lump sum superannuation benefit. The minimum investment
that you are rolling over from more than one other fund, we to start your ESSSuper Retirement Income Stream account is
will put your money in a holding account for up to 30 days, $50,000*. A transfer balance cap applies to the total amount
or until all expected rollovers have been received, whichever
of super an individual can transfer into a Retirement Income
occurs first. If we haven’t received all expected rollovers
Stream. Every individual will have their own personal transfer
within the 30-day period, your funds will be transferred to an
Accumulation Plan account (please refer to the Accumulation balance cap of between $1.6 and $1.7 million, depending
Plan Product Disclosure Statement available from our website on how much super they have transferred from their pre-
at esssuper.com.au/pds). retirement phase super account and/or transition to retirement
income stream into a retirement phase income stream before
Once all rollovers have been received, a new Income Stream
1 July 2021. The amount of the cap will be indexed periodically
account will be created. All monies kept in the holding
in $100,000 increments, in line with CPI.
account will accrue interest and be charged fees as if
they are invested in the Accumulation Plan, from the date Retirement Income Stream account balances exceeding
received to the date the holding account is exited and funds a member’s personal transfer balance cap may be subject to
are transferred to either an Income Stream account or an an excess transfer balance tax. Any defined benefit pension
Accumulation Plan account. you receive is included in the transfer balance cap. If you
You can commence a separate ESSSuper Income Stream commence a retirement income stream below the transfer
using the Income Stream Application Form (accompanying balance cap, and the value of your balance subsequently
8grows due to investment earnings, the amount in excess Income Stream account your money will be invested in an
of the cap will not be subject to excess transfer balance tax. Accumulation Plan account while we process your request.
Please see Transfer balance cap under the Taxation section of Accumulation Plan fees will apply and if you have not made
this PDS for more details on your transfer balance cap. an investment choice, your money will be invested in the
default option, the Growth investment option. We will
The ATO will calculate notional earnings on any amount
automatically open an Accumulation Plan account for you
in excess of your personal transfer balance cap in a
if you don’t already have one when you open your Income
Retirement Income Stream in the retirement phase.
Stream account. Any amounts you have in the Accumulation
The notional earnings on the excess amount will be liable
Plan account will incur fees. Any contributions into your
for excess transfer balance tax of 15% until the excess
Accumulation Plan account will be invested in the default
amount is removed.
investment option for that account or in line with the existing
Note: The ATO may issue commutation instructions authorising
investment nomination for that account if you made one.
and requiring ESSSuper to transfer excess funds in a Retirement
Income Stream to an Accumulation Plan account, on your behalf. *Special consideration may be given to accepting deposits below
$50,000 in exceptional circumstances.
* Special consideration may be given to accepting deposits below
$50,000 in exceptional circumstances.
Note:
Additional investments If rolling over money from another superannuation
fund, your other fund(s) may cancel insurance
You can transfer benefits from other super funds to a new cover as a result of transferring or rolling over
Income Stream account at any time. Once an Income your balance. You should make enquiries with
Stream has started, no further payments can be made to those funds and seek appropriate financial advice
before proceeding.
that Income Stream account. While it is possible to acquire
multiple Income Streams this may not be ideal because of
potential Centrelink implications, multiple account keeping
fees, multiple bank transactions and ease of maintenance. Cooling-off
If you subsequently decide to transfer benefits from other If you apply to receive an ESSSuper Income Stream, you
super funds, you can start a new Income Stream using have 14 days to decide whether the Income Stream meets
those transferred benefits and the balance of your existing your needs.
Income Stream account using the Restart my Income
Stream account form (ES173), available from our website The 14 days will begin either from the time you receive
at esssuper.com.au/forms or by calling our Member confirmation of starting your Income Stream, by way of a
Service Centre. confirmation letter, or at the end of the 5th day following
the day on which you became a member of the Income
A minimum restart amount of $50,000* applies. If you are Stream (i.e. the day ESSSuper received your transfer or
rolling over from other funds to restart your income stream, rollover), whichever is the earlier.
we will put your money in a holding account for up to 30
days, or until all expected rollovers have been received, This 14 day period is called the cooling-off period. If you do
whichever occurs first. If we haven’t received all expected cancel your application during the cooling-off period, any
rollovers within the 30-day period, your funds will be Government taxes and charges paid by ESSSuper on your
transferred to an Accumulation Plan account (please refer behalf will be deducted. Your account will also be adjusted
to the Accumulation Plan Product Disclosure Statement). to reflect any investment earnings (positive or negative)
We will use the combined money to start a new Income and fees incurred during the period.
Stream account in your name. Any request to cancel your application must be made in
It’s important to note that when opening an Income writing and emailed to us at info@esssuper.com.au or
Stream account or making a contribution to your ESSSuper posted to us at ESSSuper, GPO Box 1974, Melbourne VIC
Accumulation Plan account prior to restarting your 3001.
9Benefits
Payment of benefits For example, if you hold an unrestricted non-preserved
benefit and a restricted non-preserved benefit, any
income payments will be drawn from your unrestricted
Working Income Stream non-preserved benefit before being drawn from your
restricted non-preserved benefit.
Income payments
Payments made fortnightly will be credited to your nominated
Usually you can elect pension payments between 4% and bank account each second Thursday. Monthly payments will
10% of your account balance per financial year. These limits be paid by the 28th day of each month. Quarterly payments
are mandated by superannuation law. will be paid by the 28th day of March, June, September and
However, the Federal Government has temporarily reduced December. Six-monthly payments will be paid by the 28th day
superannuation minimum drawdown requirements for of June and December and annual payments will be paid by
account-based pensions by 50% for the 2020, 2021 and the 28th day of June. If the payment date falls on a weekend
2022 financial years in its response to Coronavirus. or public holiday, it will be paid on the last business day prior,
subject to processing by your financial institution.
Up until 30 June 2022, you can elect pension payments
between 2% and 10% of your account balance for your Example of minimum and maximum payment
Working Income Stream. The temporary minimum of 2% Peter has $300,000 invested in ESSSuper’s Working Income
will be revised up automatically from 2% to 4% from Stream on 1 July. He is aged 58.
1 July 2022.
The minimum amount for Peter’s payments is:
This measure will benefit members of the ESSSuper
Working Income Stream by reducing the required Balance (or lump sum) $300,000
multiplied by x
minimum pension payment from your investment Minimum percentage 2%*
option(s) to fund income stream payments. equals (for the financial year) = $6,000
Payments are calculated based on your account balance as The maximum amount for Peter’s payments is:
at 1 July each year or the date your Working Income Stream Balance (or lump sum) $300,000
commences. If you establish an account after 1 July, the multiplied by x
Maximum percentage 10%
minimum payment is proportioned for the remaining days
equals (for the financial year) = $30,000
in the financial year if payments are fortnightly, monthly,
quarterly or six-monthly. Although annual payments are *Temporary minimum in response to Coronavirus.
not normally proportioned you may request that your first Unless you nominate the investment options from
annual payment be proportioned. which your income payments are to be made, they will
Payments can be made fortnightly, monthly, quarterly, be paid in order from the lowest to highest risk investment
six-monthly or annually and are made directly to your options in which you have invested your Income Stream
nominated bank account. (i.e. Cash, Defensive, Conservative, Balanced, Growth,
Basic Growth, Ethically Minded, High Growth, Shares Only).
Income payments made from your Working Income
Nominations can be made on the Income Stream application
Stream will be based on the available components of
form (ES176) when you first apply for your Income Stream, or
your benefit. Income payments will be drawn from your
any time thereafter by completing the Change of Investment
account in the following prescribed order, until that
Order for Income Stream Payments form (E149) available from
component is exhausted, at which time it will proceed to
our website at essuper.com.au/forms
be drawn from the next component:
There is no fixed term for payment of your Working Income
1. unrestricted non-preserved benefits
Stream. While you have an account, your income will
2. restricted non-preserved benefits
continue to be paid until your account balance has been
3. preserved benefits.
paid out in full and consequently may not provide an
income for the rest of your life.
10Yearly updating of limits Retirement Income Stream
Each year on 1 July, we recalculate your minimum pension
limit. Your new limit is calculated after all your payments for Income payments
the past financial year have been deducted and investment You must elect a pension payment which is at least the
earnings are applied. minimum percentage amount required according to your
We will send you advice of your new limit and you can age (see table overleaf for your minimum percentage
choose whether to adjust the amount of your payments or payment per financial year). Payments are calculated based
you can choose to do nothing and your payments will stay on your account balance as at 1 July each year or the date
the same subject to meeting the minimum and maximum your Retirement Income Stream commences. Where you
payment requirements. establish an account after 1 July, the minimum payment is
proportioned for the remaining days in the financial year if
No amount nominated payments are fortnightly, monthly, quarterly or six-monthly.
If you do not nominate the amount you wish to receive each Although annual payments are not normally proportioned you
year, payments will be made fortnightly and will be equal to may request that your first annual payment be proportioned.
the greater of either the amount you nominated in your most Payments can be made fortnightly, monthly, quarterly,
recent instruction or the minimum pension amount payable. six-monthly or annually and are made directly to your
nominated bank account.
Deferring payments
Payments made fortnightly will be credited to your account
If you open an Income Stream account after 31 May
each second Thursday. Monthly payments will be paid by
in a particular financial year, you can elect to defer the
the 28th day of each month. Quarterly payments will be paid
commencement of your payments until the following
by the 28th day of March, June, September and December.
financial year.
Six-monthly payments will be paid by the 28th day of June
Commutations and December and annual payments will be paid by the
28th day of June. If the payment day falls on a weekend or
Generally, you cannot make any commutations (lump sum
public holiday, it will be paid on the business day prior.
withdrawals) from your Working Income Stream unless you
have an unrestricted non preserved component. Maximum Unless you nominate the investment options from which
limits also apply. your income payments are to be made, they will be paid
from the lowest to highest risk investment options in
The only way your Working Income Stream account can
which you have invested your Income Stream (i.e. Cash,
be accessed in full is if you satisfy one of the following
Defensive, Conservative, Balanced, Growth, Basic Growth,
conditions of release:
Ethically Minded, High Growth, Shares Only). Nominations
{{you permanently retire from the workforce on or after can be made on the Income Stream application form (ES176)
your preservation age when you first apply for your Income Stream, or any time
{{you cease employment on or after age 60 thereafter by completing the Change of Investment Order
{{you reach age 65 for Income Stream Payments form (E149) available from our
{{you become permanently incapacitated at any age
website at esssuper.com.au/forms
{{you are suffering from a terminal medical condition, or There is no fixed term for payment of your Retirement
{{you die. Income Stream. Your income will continue to be paid until
your account balance has been paid out in full , or you
You may be able to access a limited portion of your funds transfer your pension to another superannuation product
if you meet strict criteria under financial hardship or or fund. Consequently, a Retirement Income Stream may
compassionate grounds. not provide an income for the rest of your life.
11Retirement Income Stream minimum payment amount Age Previous minimum New reduced rates
Federal Government regulations set a minimum for the drawdown rates until 30 June 2022
amount of income you can receive each year, depending (%) (%)
on your age. You can choose any amount (up to your Under 65 4 2*
account balance) above the minimum and change
65-74 5 2.5
the amount at any time.
75-79 6 3
The minimum pension amount can be calculated by
multiplying your account balance as at 1 July each year 80-84 7 3.5
by the minimum payment percentage for your age as 85-89 9 4.5
listed below. 90-94 11 5.5
The minimum annual payment amount may be paid only 95 or more 14 7
via regular income payments – lump sum commutations
do not count towards minimum annual pension payments. * This minimum also applies to payments made from the Working
Income Stream.
The Federal Government has temporarily reduced
superannuation minimum drawdown requirements for Members upon joining or at any time can elect the new
account-based pensions by 50% for the 2020, 2021 and minimum drawdown rates, however, the new minimum
2022 financial years in its response to Coronavirus. drawdown rates will revert back to the previous minimum
levels automatically from 1 July 2022.
Up until 30 June 2022, you can elect minimum pension
payments from 2% of your account balance for your If you are an existing member and you wish to elect the
Retirement Income Stream. The temporary minimum of new minimum drawdown rate, please complete the
2% will be revised up automatically from 2% to 4% from Income Stream Payment Change Form (E137) available online
1 July 2022. at esssuper.com.au/forms under the ‘Change or update
your details’ section. The completed form can be posted
This measure will benefit members of the ESSSuper back to us or emailed to info@esssuper.com.au
Retirement Income Stream by reducing the required
minimum pension payment from your investment Example as per temporary minimum payment
option(s) to fund income stream payments. Peter has $300,000 invested in ESSSuper’s Retirement
All income streams members must elect to receive a Income Stream. He is aged 68 and therefore has a
pension payment amount which is at least the minimum temporary minimum drawdown rate of 2.5%.
percentage amount required according to the age bracket
The minimum amount for Peter’s payments is:
you fall into. The new minimum drawdown rates for all age
brackets are shown in the following table. Balance (or lump sum) $300,000
multiplied by x
Minimum percentage 2.5%
equals (for the financial year) = $7,500
This means Peter must receive a Retirement Income Stream
payment of at least $7,500 for the financial year.
Note: Subject to the balance in your account, there is no
maximum amount you must withdraw each year.
12Yearly updating of limits The following rules apply to commutations:
Each year on 1 July, we recalculate your minimum pension {{they can only be made payable to you
limit. Your new limit is calculated after all your payments for {{withdrawal requests must be in writing and directed
the past financial year have been deducted and investment to ESSSuper or submitted online by logging into your
earnings are applied. Members Online account at esssuper.com.au/login
We will send you advice of your new limit and you can choose {{the pro rata minimum pension amount must be paid
whether to adjust the amount of your payments or you can before the commutation.
choose to do nothing and your payments will stay the same
subject to meeting the minimum payment requirement. Please note that lump sum tax may be payable on
commutations (refer to Taxation on page 31 for details).
If your current payment amount is set at the current year’s
minimum limit, your payments will adjust to your new limit. Terminal medical condition
You can nominate to have your fixed dollar income payments You are able to access your benefit as a tax free lump sum if
indexed in line with the Consumer Price Index (CPI). you are suffering from a terminal medical condition. In order
to release your benefits, ESSSuper requires medical reports
No amount nominated from two practitioners (one of whom is a relevant specialist)
If you do not nominate the amount you wish to receive that certify that you are likely to die within 24 months.
each year, payments will be made fortnightly and will be If you need to make a claim, please call the Member
equal to the greater of either the amount you nominated Service Centre.
in your most recent instruction or the minimum pension
amount payable relative to your age. Death benefits
Deferring payments You are required to nominate what happens to your
account balance should you die before your benefit is
If you open an Income Stream account after 31 May in a
paid out in full. You have two options and we suggest you
financial year, you can elect to defer the commencement
consider obtaining advice to assist you in deciding which
of your payments until the following financial year.
option best suits your needs.
Commutations
1. Reversionary beneficiary option
You can make full or partial commutations (lump sum
Under this option, you can nominate a spouse (as defined
withdrawals) from your Retirement Income Stream at
in the Fund’s rules – see below) to whom your pension
any time, until your balance is paid out in full. Partial
payments will revert on your death. Selecting this option
commutations will be treated as lump sum super
allows ESSSuper to continue regular payments to your
payments and will be assessable for tax purposes.
spouse until your account balance has been paid out in full.
If you make a full commutation and close your account
The minimum reversionary pension amount for your spouse
your membership will cease and you will not be entitled
is calculated by multiplying your account balance at the date
to any further payments. Once you have no remaining
you die by the minimum pension limits for your spouse’s age.
accounts with ESSSuper, you will not be eligible to open
another account.
13The Federal Government has temporarily reduced If no valid binding nomination was held, your benefit
superannuation minimum drawdown requirements for would be paid at the Board’s discretion to one or more
account-based pensions by 50% for the 2020, 2021 and of your dependants and/or your estate. If you had made
2022 financial years in its response to Coronavirus. a non-binding nomination, the Board would consider
that nomination – but would not be bound by it – when
Up until 30 June 2022, you can elect minimum pension
making its decision.
payments from 2% of your account balance for a
reversionary pension. The temporary minimum of 2% will
Note:
be revised up automatically from 2% to 4% from 1 July 2022.
The latest beneficiary nomination you submit will
be used by the Board in the event of your death.
Example
When Jack dies his income stream account balance is
$200,000 and his spouse Anne is the nominated reversionary
beneficiary. Anne is aged 77 and therefore has a minimum Definition of Spouse
drawdown rate of 3%.
Your spouse includes:
The minimum amount for Anne’s payment is:
{{a person to whom you are legally married
Balance (or lump sum) $200,000
{{a person, whether of the same or opposite sex, with
multiplied by x
Minimum percentage 3% whom you are not legally married, but lives with you on
equals (for the financial year) = $6,000 a genuine domestic basis as a couple
{{a person, whether of the same or opposite sex, with
The following conditions apply to reversionary income streams:
whom you are in a relationship that is registered under
{{the Board is bound by your nomination an Australian State or Territory law.
{{payments will continue to be paid to your nominated
spouse until your account balance is paid out in full
Definition of Dependant
{{your nominated spouse will have the option to convert Under the Emergency Services Superannuation Act 1986
the reversionary income stream to a lump sum at any time (ESS Act), Dependant is defined as someone who is:
{{if your nominated spouse dies before the reversionary {{your spouse
income stream is paid out in full, the balance will be
{{a child of yours (or your spouse), or
paid to their estate, and
{{any person who, in the opinion of the Board was wholly
{{to amend a reversionary benefit you must complete
or partially dependent or had a legal right to look to
the Reversionary Beneficiary Nomination form (ES168)
you for financial support.
available from our website at esssuper.com.au/forms
or by calling our Member Service Centre. If you have no Dependants, your benefit will be paid to
your estate.
To nominate a reversionary beneficiary you should
complete Option 2 of the Beneficiary Details section of the Non-binding nomination
Income Stream application form (ES176).
If you make a non-binding nomination, the Board will take
it into account when deciding who to pay your benefit to.
2. Lump sum option
The Board will, subject to its discretion, pay the benefit to
Under this option, your benefit will be paid to one or
your Dependants and/or your estate depending on the
more of your Dependants (as defined in the Fund’s rules
circumstances at the time of death.
– see overleaf ) or your estate.
To nominate your non-binding beneficiary, you should
If at the time of your death the Board had accepted a
complete the relevant section of the Income Stream
binding nomination that remained valid, your benefit
application form (ES176) (accompanying this document) or
would be paid in accordance with that nomination.
14log into your Members Online account at No nomination
esssuper.com.au/login and complete it online.
If, in the event of your death, no nomination has been
Please note that your non-binding nomination is a guide received, the Board will distribute your benefit to your
only and the Board has absolute discretion in determining dependant(s) and/or your legal personal representative in
who should receive your benefit and in what proportion, the proportions determined by the Board in its discretion,
including whether some or all of your benefit should subject to the governing rules of the Fund.
be paid to your estate. If you wish to add to, or change
your beneficiaries at any time, you can advise ESSSuper Proof of identity
by logging into your Members Online account or by
completing the Non-binding Death Benefit Nomination form Under the Anti-Money Laundering and Counter Terrorism
(E107) available from our website at Financing Act 2006 (AML/CTF), superannuation funds are
esssuper.com.au/forms required to identify, monitor and mitigate risks relating
to the laundering of money or the financing of terrorism.
Binding death benefit nomination Accordingly, you may be required to provide proof of
A binding death benefit nomination allows you to your identity.
nominate who you wish to receive your benefit in the ESSSuper is required to report suspicious transactions to
event of your death. You may nominate a Dependant AUSTRAC, the regulator responsible for AML/CTF regulations.
and/or your estate. If your nomination remains valid the As part of this reporting process, ESSSuper may need to
Board is bound to act according to your instructions and disclose a member’s personal information to AUSTRAC. We
cannot vary its decision, even to allow for any changes in are prohibited from telling you when such reports are made.
your circumstances from the time of your nomination to
For more information about the valid forms of identification,
the time of your death.
refer to the applicable Withdrawal form (ES163 or ES164)
However, if at the date of your death any person nominated available from our website at esssuper.com.au/forms
by you has ceased to be a Dependant, the entire nomination
will be invalid and the Board will decide in its absolute
discretion who will receive your benefit and in what
proportion, including whether some or all of your benefit
should be paid to your estate. Your binding nomination would
then be considered a non-binding nomination by the Board.
Binding nominations have a fixed term of three years
and override any nomination you have previously made.
It is therefore essential that you review your binding
nomination not only as your circumstances change but
also at least every three years.
To make a binding death benefit nomination, you should
complete the Binding Death Benefit Nomination form (ES106).
If you wish to revoke or change your binding death
benefit nomination at any time, you can advise ESSSuper
in writing by completing the Binding Death Benefit
Nomination form (ES106) available from our website at
esssuper.com.au/forms or by calling our Member Service
Centre.
15Investment choice
Sustainability
Investment principles
We consider both the opportunities and risks of an
Our aim is to help every member achieve a comfortable environmental, social and governance nature relevant to
and financially secure life in retirement through consistent our investment decisions.
investment performance that delivers competitive
risk-adjusted returns over the long term. The above principles guide our investment strategy and
approach.
We strive to offer a range of flexible investment options so
that you can choose investment solutions appropriate to
your needs.
Value
Different types of investment
Each of the investment options invests in one or more
Balance Sustainable asset classes. There are three main asset classes:
{{shares
{{defensive fixed income, and
Flexible {{cash.
The returns on shares are mainly derived from capital gains
and income from dividends. Shares are classified as growth
assets. Growth assets generally offer the potential for
greatest long term capital appreciation (when compared
with defensive assets), but the returns can fluctuate, with
negative returns possible from time to time.
Defensive fixed income and cash are primarily classified as
Our approach is guided by our investment principles:
defensive assets. These assets mainly derive returns from
interest. Defensive assets generally offer the potential of
Balance
lower long term capital appreciation (when compared to
Our investment style aims to protect against short term growth assets), but the returns are generally more stable and
volatility and focuses on achieving superior results over less likely to fluctuate from one year to the next. Cash returns
the medium to long term. are usually positive, but negative returns are possible.
Value
We seek to simplify investment structures without
compromising returns, only incurring higher costs where
returns can be maximised to provide value for money.
17Diversification Liquidity risk and unlisted assets
The Income Stream’s investment options also invest Liquidity risk can arise when a fund has difficulty selling all
in other asset classes that are expected to behave or part of its assets in a short time frame.
differently to the traditional assets classes such as shares,
Asset classes which are more prone to liquidity risk than
defensive fixed income and cash. These asset classes
others are unlisted property and infrastructure given they are
include infrastructure, property, multi-asset strategies and
mostly not publicly traded on a recognised exchange. They
alternative strategies. These asset classes may have both
are either directly traded between buyers and sellers, or are
growth and defensive characteristics but more importantly
bought or sold through pooled investments, overseen by an
provide diversification to the traditional asset classes that
investment manager or responsible entity.
each of the Income Stream’s investment options invest in.
The types of unlisted assets in which ESSSuper invests
may include property, infrastructure, private equity,
What are the risks? commodities, timber, credit and other alternative strategies.
With every investment, there are risks. Generally, the higher Assets which are unlisted form an important part of ESSSuper’s
the level of risk, the higher the potential return. investment diversification strategy. Different investment
options will have varying levels of exposure to unlisted assets
Investment risk (e.g. the High Growth option may have up to 60% in unlisted
property and infrastructure assets whereas the Defensive
Investment risk refers to the likelihood that the value of an option could have up to 20%).
investment will rise and fall within a given period. Some asset
classes are considered riskier than others.
The graph below shows how a $10,000 investment in each of the major asset class markets would have grown over
the past 20 years to 30 April 2021.
$60,000
— Cash (Bloomberg AusBond Bank Index)
— Australian Fixed Interest (Bloomberg AusBond Composite)
$50,000 — Australian Shares (S&P ASX 300)
— International Fixed Interest (Bloomberg Barclays Global Aggregate)
— International Shares (MSCI All Country World)
$40,000
$30,000
$20,000
$10,000
Source: Factset
0
Apr 01 Apr 03 Apr 05 Apr 07 Apr 09 Apr 11 Apr 13 Apr 15 Apr 17 Apr 19 Apr 21
Note: The above values have not been adjusted for fees and taxes. Please note that past performance is not an indication of future performance.
18Whilst these investments have the potential to lower Currency risk
volatility and enhance returns over the longer term,
they also carry risks in terms of liquidity, counterparty When ESSSuper invests in assets in other countries, any
and valuation risk. change in the value of foreign currencies relative to the
Australian dollar will usually result in a change to the
ESSSuper’s strategy to manage these risks includes: valuation of those investments in Australian dollar terms.
{{monitoring of the underlying asset liquidity in all
investment options Security specific risk
{{regular monitoring of cash flow requirements to When an individual company or asset fails (e.g. through
ensure ESSSuper holds sufficient liquid assets to meet fraud or bankruptcy), the value of an underlying
expenses and income stream and benefit payments investment in that company or asset can fall sharply.
{{diversifying investments across multiple investment
managers to ensure diversification of securities; and Sovereign risk
{{monitoring of counterparty and other risks.
The risk that a government will either default on its
The majority of ESSSuper’s underlying unlisted assets are obligations, change the terms of repayment or impose
valued quarterly by independent experts. controls on the return of capital.
Counterparty risk Environmental, social and governance
Counterparty risk arises when the counterparty (e.g. the (ESG) risk
responsible entity or issuer of a security) defaults on some ESG risks include a broad range of factors which can impact
or all of its contractual obligations. the Fund’s short term investment performance as well as
long term sustainability. For more information, refer to our
Valuation risk Responsible Investment Policy available on our website at
esssuper.com.au/responsibleinvestment
Valuation risk is the risk that assets are not valued according
to generally accepted market practices.
Derivatives risk
Market risk Derivatives are used to reduce risk (hedging) or gain
exposure to other types of investments when appropriate.
Each asset class can be affected by economic, technological,
political or legal conditions within its own markets. Changes Risks associated with derivatives include:
in investor or consumer sentiment as a result of market
{{the value of the derivative failing to move in line with
conditions can affect the value of investments, which may
the underlying assets
rise and fall.
{{the risk that an investor may not be able to meet
payment obligations as they arise; and
Interest rate risk
{{the risk that a counterparty may not meet its
Changes in interest rates can have an impact on the obligations under a derivatives contract.
investment returns of different asset classes (this
ESSSuper uses derivatives such as futures and forward
particularly applies to defensive fixed income, credit and
contracts to efficiently gain exposure to markets and
other fixed interest investments).
to hedge investment positions or foreign currency
positions (designed to protect the Australian dollar value
Legislative risk
of offshore assets). Our investment managers may also
The risk that changes in laws or regulation could have invest in derivatives in order to assist with the effective
a significant impact on the value of certain investments. management and protection of the Income Stream’s assets.
19The effect of inflation
Things to consider when
selecting investment options Consider how much your basic expenses like food, medical
bills, clothing and travel have increased in price over the
last ten years. When choosing how to invest your super, it’s
The importance of diversification important that, subject to your risk tolerance, you consider
the likelihood of the option you choose providing sufficient
A common way to reduce investment risk is through
returns above inflation. Otherwise, it may be difficult to fund
diversification across different types of investments, the
your retirement goals as inflation will erode the purchasing
purpose of which is to spread risk. The more diversification,
power of your retirement income, meaning that over time
the less reliance on the performance of any one investment
you will need more money to purchase the same goods.
because each asset class or underlying security performs
well at different times. When one asset is not performing The return above the inflation rate is called the real
well, you may have several others that are performing rate of return on your investment. For example, if your
better to balance the overall return. investment earns 8% and inflation is 3%, then your real
rate of return is 5%.
Diversification normally involves allocating in certain
proportions:
The effect of compound earnings
{{within asset classes, (e.g. across a wide range of shares
in different industries and companies in Australia and Over time, small differences in the value of your benefit
overseas), and/or can turn into large differences through the power of
compounding. Compounding is the process whereby
{{across asset classes (i.e. shares, defensive fixed income,
your money earns returns (positive or negative) on top of
cash and other asset classes).
returns already invested. By choosing the right investment
Applying this approach can reduce the impact of negative options for your super, you can harness the potential of
returns on your investment option. The investment options compound earnings.
we offer adopt varying levels of diversification. You can
choose to invest in one investment option or choose a Investment options with ESSSuper
combination of multiple investment options to diversify
your investment. Investment choice is available to all Income Stream
members. It allows you to tailor your super to meet your
Your time horizon individual goals.
ESSSuper offers a choice of nine investment options:
When choosing how to invest, you need to carefully
consider how much risk you are prepared to accept in the
Standard Options
short term to achieve your long term objectives. The length
{{Shares Only
of time you have until you retire, or in retirement is one of
the major considerations in determining your tolerance to {{High Growth
risk. Investors with a longer time horizon may be prepared {{Growth (default option)
to invest more aggressively than those with a shorter time {{Balanced
horizon. As an investor’s time horizon shortens, they may {{Conservative
want to invest more conservatively.
{{Defensive
{{Cash
20Alternative Options
{{Basic Growth
Need help with your super?
{{Ethically Minded {{visit esssuper.com.au for tips, tools and calculators
{{book your place at our super webinars
Standard Options at esssuper.com.au/webinars
These are all ‘pre-mixed’ options and offer a ‘range of risk {{call our Member Service Centre on:
profiles’ from defensive to growth. The Standard Options 1300 650 161 (for emergency services members)
represent the core options that ESSSuper offers and are 1300 655 476 (for state super members)
underpinned by our investment approach. {{call us to arrange an individual consultation with
a Member Education Consultant
Alternative Options {{if you want personal financial advice tailored to your
individual circumstances, we can arrange a referral
The Alternative Options are designed to complement
to a licensed financial adviser that charges on a fee-
ESSSuper’s standard investment offering, giving members
for-service basis (commission free). ESSSuper has an
greater flexibility and choice. The options are designed for
arrangement with Link Advice Pty Ltd for Link Advice
members looking to prioritise a particular characteristic that
and its authorised representatives to provide members
is important to them when selecting their investment mix.
with financial advice under Link Advice’s Australian
You can choose a single option or a combination of Financial Services Licence (No. 258145).
options. If you don’t make a choice, your benefit and
investment earnings will be invested in the default
investment option, Growth.
ESSSuper has an arrangement with Link Advice Pty
If you are unsure which investment option is best for you, Ltd to provide financial advice to ESSSuper members.
have a look at the Investment Risk Profiler on our website at ESSSuper pays Link Advice a fee for this service. Neither
esssuper.com.au/calculators the Board, nor the Victorian Government, guarantee or
endorse any recommendations made by Link Advice
A financial adviser can help you understand investment or its authorised representatives, or are responsible for
risk and help you assess which investment options are the advice and actions of Link Advice or its authorised
appropriate for your specific requirements and your risk representatives.
tolerance. For more information, please visit our website
at esssuper.com.au/advice or call our Member Service
Centre.
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