Plum Retirement Income Product Disclosure Statement - Plum Super
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Plum Retirement Income
Product Disclosure Statement
Preparation date Issued by the Trustee The Fund
1 June 2021 NULIS Nominees (Australia) Limited MLC Super Fund
ABN 80 008 515 633 ABN 70 732 426 024
AFSL 236465This document should be considered
before making a decision about
whether to invest or continue to hold
the product.
In addition to the PDS you should also
consider the information contained in
the Application Form before making
a decision to invest in this product.
For the latest copy please go to
plum.com.au/forms-publications
or contact us for a copy.
Contents
1. About Plum Retirement Income 4
2. Important Terms Explained 6
3. Benefits of investing with Plum Retirement Income 7
4. Risks of super and retirement income 11
5. How we invest your money 15
6. Fees and other costs 42
7. How super and retirement income is taxed 48
8. How to open an account 50
9. O
ther information 54
This document has been prepared on behalf of NULIS Nominees (Australia) Limited, ABN 80 008 515 633, AFSL 236465 (NULIS) as Trustee
of the MLC Super Fund, ABN 70 732 426 024 (the Fund). NULIS is part of IOOF Holdings Ltd ABN 49 100 103 722 and its related bodies
corporate (IOOF Group).
The information in this PDS is general in nature and doesn’t take into account your objectives, financial situation or individual needs.
Before acting on any of this information you should consider whether it is appropriate for you. You should consider obtaining financial
advice before making any decisions based on this information.
References to ‘we’, ‘us’ or ‘our’ are references to the Trustee, unless otherwise stated.
MLC Limited uses the MLC brand under licence. MLC Limited is part of the Nippon Life Insurance Group and is not a part of the IOOF Group.
This offer is made in Australia in accordance with Australian laws.
MLC Asset Management Services Limited ABN 38 055 638 474 AFSL 230687 and each referenced investment manager and JANA Investment
Advisers Pty Ltd ABN 97 006 717 568 AFSL 230693 have given written consent to be named in the PDS and to the inclusion of statements
made by them. As at the date of the PDS, these consents have not been withdrawn.
In some cases, information in this PDS has been provided to us by third parties. While it is believed the information is accurate and
reliable, the accuracy of that information is not guaranteed in any way.
Subject to super law, the final authority on any issue relating to your account is the Fund’s Trust Deed, which govern your rights and
obligations as a member.1. About Plum Retirement Income
Our main focus is to help you build With Plum Retirement The key pension rules
a better future in the lead up to
Income, you’ll enjoy: Your Plum Retirement Income account
retirement, and to help fund the
lifestyle you want in retirement. • regular income payments made can be opened under both transition
If you’re a Plum Super member, directly into your nominated to retirement or retirement pension
you have exclusive access to bank account rules, as follows:
Plum Retirement Income Product • the ability to withdraw all or part of
Transition to retirement
to help you fund the lifestyle you want. your balance at any time (if eligible)
(TTR) rules
Plum Retirement Income is a pension • the flexibility to choose an
Transition to retirement pensions
that provides you with a simple and investment path specific to your
allow members who have reached
flexible way to convert your super into retirement needs
their preservation age to access their
a regular income stream when you are • online access so you can switch super benefits as a regular income
moving toward retirement or retire. your investments at any time stream while still in the workforce.
• the ability to make beneficiary
A minimum and maximum payment
Plum Retirement Income is nominations
limit applies to income payments made
only available to existing Plum • access to financial advice services from your account. When you start a TTR
Super members who have met a • annual statements, and pension, you’re in the pre-retirement
condition of release. Plum Super phase. Once you meet an eligible
• access to annual tax and Pay
is issued by NULIS Nominees condition of release, your TTR pension
As You Go (PAYG) statements,
(Australia) Limited. You should moves into the retirement phase.
where applicable.
consider the relevant Product
Disclosure Statement for Plum Insurance is not offered with your You generally cannot withdraw a lump
Super, which is available Plum Retirement Income account. sum from a transition to retirement
by logging in to your account at account until you satisfy an eligible
Your account balance in Plum condition of release. For more
plum.com.au or by calling us on
Retirement Income is invested information, see Section 2 ‘Important
1300 55 7586, in deciding whether
in accordance with your chosen terms explained’ and Section 9
to acquire, or continue to hold,
investment path. The balance of your ‘Additional income payments and
an interest in Plum Super.
account will increase or decrease over withdrawals’.
time, reflecting investment earnings,
income payments, withdrawals, fees When you attain the age of 65 or
and costs, and any taxes payable. As you advise us that you have satisfied
your account balance changes over an eligible condition of release,
time, the amount of your income your investment options in the pre-
payments may vary. Your income retirement phase will be transferred
payments will stop when your to the closest equivalent retirement
account balance is reduced to zero. phase investment options, where
tax will no longer be payable on the
investment earnings of your transition
to retirement account.
Any applicable transaction costs
associated with this investment
transfer will apply.
For information on the tax treatment How super and retirement The MLC Group of Companies has $120.5
of your account, please read Section 7 billion funds under administration (as at
income works
of this document ‘How super and 31 March 2021)1 on behalf of individual
retirement income is taxed’. Investing through super is generally and corporate investors in Australia.
a tax-effective way to save for
For information on the payment limits your retirement. The Government Plum provides super, pension,
that apply to your account, please read encourages Australians to use super to and insurance solutions, and work
Section 8 ‘How to open an account’ build wealth that will generate income closely with you and your employer
and Section 9 ‘Other information’. in retirement. Plum Retirement Income to help grow and protect your wealth.
For more information on the rules provides you with a simple flexible You can find out more about The
that apply in retirement phase, please way to convert your super investments Fund, details about us and executive
read the section on ‘Retirement into a regular income stream when remuneration, and other Fund
pension rules’. you transition into retirement and documents required
a tax-effective income stream when to be disclosed by the law at
Retirement pension rules you retire. plum.com.au/yoursuperfund
Retirement pensions allow members You can’t add money to your Plum
who have satisfied an eligible Retirement Income account once it’s You should regularly consider your
condition of release to access their started. That’s why we suggest you pension arrangements with your
super benefits. consider consolidating your super financial adviser to ensure that
In a retirement pension account: with us before starting your income they continue to meet your needs
stream. Consolidating your super also and objectives. You should also
• a minimum payment limit applies
gives you a single view of your money, speak to your financial adviser
to income payments made from
helps keep track of your investments before making any changes, or
the account
and means you may only pay one set contact us for more information.
• there is no limit on how much you of Administration fees for your super.
can receive from your pension Any applicable rollovers, transfers and
• your investment earnings are tax contributions that you wish to invest in
free, and your Plum Retirement Income account
• there is a general transfer balance need to be made to your Plum Super
cap that limits the amount in account prior to the commencement of
retirement phase. your income stream. We recommend
you speak to a financial adviser before
For information on the tax treatment consolidating your super and making
of your account, please read Section 7 a decision to start an income stream.
of this document ‘How super
and retirement income is taxed’. Plum Retirement Income is part of
For information on the payment limits the MLC Super Fund of which NULIS
that apply to your account, please read Nominees (Australia) Limited is the
Section 8 ‘How to open an account’ Trustee.
and Section 9 ‘Other information’.
1A
s at 31 March 2021, MLC Group of Companies was part of the wealth management division of the National Australia Bank Limited
ABN 12 004 044 937 AFSL 230686.
2. Important Terms Explained
Eligible conditions Preservation age table Transfer Balance Cap
of release Preservation ages A limit applies to the amount that can
be transferred to the retirement phase
Generally, an eligible condition Date of birth Preservation to support superannuation income
of release is a condition that does age streams. The limit is known as the
not have a cashing restriction. Before 1 July 1960 55 general Transfer Balance Cap and is
To be eligible, you must meet a $1.6 million for the 2020-2021 year of
1 July 1960 – 56
condition of release, such as: income. From 1 July 2021, the general
30 June 1961
• reaching age 65 transfer balance cap increases to $1.7
1 July 1961 – 57
• reaching your preservation 30 June 1962
million. Individuals who commenced a
age (between age 55 and 60 retirement phase pension prior
1 July 1962 – 58
depending on your date of 30 June 1963
to 1 July 2021 may have an
birth) and permanently retiring, individual transfer balance cap.
1 July 1963 – 59
Further information can be found
• ceasing an employment 30 June 1964
at ato.gov.au or your account at
arrangement on or after From 1 July 1964 60
my.gov.au
the age of 60,
• becoming permanently This cap applies to all retirement phase
incapacitated, or superannuation income streams you
have from all providers. TTR pensions
• having a terminal medical
in pre-retirement phase are excluded,
condition, (as those terms are
until they’re moved into retirement
defined by the law).
phase. Individuals who exceed this
For further information on
cap may be subject to excess transfer
conditions of release, refer to
Section 9 ‘Additional income balance tax and will be required to
payments and withdrawals’ withdraw or transfer the excess back
and ato.gov.au into the accumulation phase. For more
information, go to ato.gov.au
Pre-retirement phase
If you are a transition to retirement You’re in the pre-retirement phase if
pensioner in the pre-retirement you reach your preservation age and
phase, you need to notify us once are under 65, and you haven’t yet
you meet an eligible condition of notified us that you’ve met one of the
release (unless you turn age 65). eligible conditions of release.
Please note, when you reach age 65,
investment earnings automatically Retirement phase
become tax exempt without you
having to notify us. You’re in the retirement phase once
For all other eligible conditions of you reach age 65 or you notify us that
release, the investment earnings you’ve met one of the other eligible
will only become exempt when you conditions of release.
notify us.
3. B
enefits of investing with Plum
Retirement Income
Plum Retirement Income gives you access to sophisticated investment solutions and a range of features to help you get your
money working for you. It allows you to:
• transition to retirement by paying you an income stream from your account to supplement your employment income
• maintain your tax-effective savings in retirement, and
• enjoy retirement while receiving a tax-effective income stream.
You can tailor your account in many ways to help you take control of your financial future.
Plum Retirement Income Investment Paths
When it comes to retirement planning, we understand that some people like to be actively involved in investment decisions,
whilst others prefer to leave it to the experts. For this reason, Plum Retirement Income offers the choice of two different
Investment Paths to suit varied levels of involvement and investment knowledge:
• Self Select Investment Path, and
• Cultivator Investment Path.
Self Select Investment Path
The Self Select Investment Path lets you choose from five investment options, each with varying return and risk profiles.
You can choose the one that best meets your personal needs and tolerance for investment risk, or you can allocate varying
percentages of your account to one or more of the five investment options and switch between them at any time.
The investment options available for the Self Select Investment Path are summarised in the following table.
If you’re seeking a Transition to Retirement income stream in the pre-retirement phase, you can only invest in the Self Select
Investment Path.
Once you attain the age of 65, or advise us that you have satisfied an eligible condition of release, your investment
options in the pre-retirement phase will be transferred to the closest equivalent retirement phase investment options,
where you will no longer pay tax on the investment earnings of your transition to retirement account. Any applicable
transaction costs associated with this investment transfer will apply. In the retirement phase, you will also have access
to the Cultivator Investment Path shown on page 9.
3. Benefits of investing with Plum Retirement
Income (continued)
Self Select Investment Path
Pre-retirement phase
Investment
option
Cash Fund Cash Pre-mixed
Cash Fund FundPre-mixed
Cash Pre-mixed
Fund Fund
Cash Pre-mixed Pre-mixed
Pre-mixed
Pre-mixedPre-mixed
Pre-mixed Pre-mixed
Pre-mixed
Pre-mixed Pre-mixed
Pre-mixed Pre-mixed
Pre-mixed
Pre-mixed
Pre-mixed
Pre-mixed
Pre-mixed
(Pension)
(Pension) Conservative
(Pension) Conservative
(Pension)
(Pension) Cautious
Conservative Cautious
Conservative
ConservativeModerate
Cautious Moderate
Cautious
Cautious Assertive
Moderate Assertive
ModerateModerate
Assertive
Assertive
Assertive
This option invests in Aims to provide Aims to provide a Aims to invest Aims to invest
deposits with banks limited ups and balanced mix of proportionately primarily in growth
(100% National downs in investment assets, steady long- more in growth assets with limited
Australia Bank as at value by investing term returns and assets than defensive exposure to fixed
Investment
31 March 2021) and primarily in defensive moderate investment assets to achieve income investments,
approach
may also invest in assets. volatility. medium to high accepting higher
other comparable long-term returns, volatility to seek
high quality with moderate to higher returns over
securities. high volatility. the long term.
67% Defensive assets 47% Defensive assets 25% Defensive assets 14% Defensive assets
Asset allocation 100% Cash
33% Growth assets 53% Growth assets 75% Growth assets 86% Growth assets
Retirement phase
Investment
option
Cash Fund
Cash Fund CashPlum
Fund Plum
Active
Cash Fund-Active
CashPlum
Fund-Plum
Active
Plum Plum
Active -Active
-Active
Plum Plum -Active
Plum
-Active -Plum Plum
Active -Active
-Active
Plum Plum -Plum
-ActiveActive
-Plum-Plum
Active -Active
Active
Plum Plum -Active
-Active -Plum-Active
Plum -Active -
(Pension)
(Pension) Conservative
Conservative
(Pension)
(Pension)
(Pension)
Conservative Cautious
Cautious
Conservative
Conservative Moderate
Cautious Moderate
CautiousCautious
Moderate Assertive
Assertive
Moderate
Moderate
Assertive
Assertive
Assertive
The option invests in The option invests The option invests The option invests The option invests
deposits with banks primarily in defensive in a balanced mix proportionately primarily in growth
(100% National assets to limit the of assets to provide more in growth assets with limited
Australia Bank as at ups and downs in steady long-term assets than defensive exposure to
Investment 31 March 2021) and investment value. returns with assets to achieve defensive assets
approach may also invest in moderate investment medium to high whilst accepting
other comparable volatility. long-term returns, higher volatility in
high quality with moderate to order to seek higher
securities. high volatility. returns over the
long term.
73% Defensive assets 55% Defensive assets 35% Defensive assets 25% Defensive assets
Asset allocation 100% Cash
27% Growth assets 45% Growth assets 65% Growth assets 75% Growth assets
For more information about the Self Select Investment Path, refer to How we invest your money on page 15.
Cultivator Investment Path
The Cultivator Investment Path is an automated investment and income payment strategy. It aims to deliver income stability
over the short to medium term and growth over the long term so your money lasts as long as possible.
With its inbuilt smarts, Cultivator Investment Path invests your account balance across three investment options and reviews
and (where appropriate) rebalances between them each quarter. The automated approach reduces the tendency for investors
to react to market movements which can help keep your retirement savings on track.
If you’re a Transition to Retirement member in the retirement phase, you can invest in the Cultivator Investment Path.
Cultivator Investment Path
Investment
option
Cash Fund
Cash Fund Plum Plum
Cash Fund ActivePlum
-
Active - Plum
Active ActivePlum
- Plum -
Active - Plum
Active ActivePlum
- Plum -
Active - Plum
Active ActivePlum
- Plum -
ActiveActive
- -
(Pension)
(Pension) Conservative
(Pension) Conservative Cautious
Conservative CautiousModerate
Cautious ModerateAssertive
Moderate Assertive
Assertive
The option invests in deposits with The option invests in a balanced mix The option invests primarily in
banks (100% National Australia of assets to provide steady long-term growth assets with limited exposure
Investment
Bank as at 31 March 2021) and may returns with moderate investment to defensive assets whilst accepting
approach
also invest in other comparable volatility. higher volatility in order to seek
high quality securities. higher returns over the long term.
55% Defensive assets 25% Defensive assets
Asset allocation 100% Cash
45% Growth assets 75% Growth assets
Cash Fund Plum Active - Plum Active -
(Pension) Cautious Assertive
For more information about the Cultivator Investment Path, refer to How we invest your money on page 15.
Key features of the Investment Paths
Self Select Investment Path Cultivator Investment Path
Transition to retirement Available for you. Available to you when you move into the
pension (pre-retirement retirement phase.
phase)
Retirement pension and Available for you. Available for you.
Transition to retirement
pension (retirement phase)
Eligibility You need a minimum investment of $50,000 You need a minimum investment of $50,000
to open your account. to open your account, however, if you are
considering selecting this Investment Path, it
is recommended to invest at least $200,000.1
Investment mix Selected by you, and you can switch between Selected for you, and rebalanced on a quarterly
investment options at any time. basis (see page 16 for details on how this works).
Income payments You select your income payment amount based on your cash flow requirements (subject to
applicable income limits), and have these payments made directly into your nominated Australian
bank account.
Withdrawals You can withdraw all or part of your balance at any time (if you have met a relevant
condition of release).
Support You have access to financial advice services, online access and annual statements
(and PAYG statements where applicable).
1 The Cultivator Investment Path works as intended when your annual income payment rate is less than 7% of your account balance
and you have a balance of at least $200,000.
Reporting Financial advice services Plum member benefits
We’ll keep you updated with regular A financial adviser can help you clarify We’re proud to give you access to
reports and online access to your your goals based on your savings and member benefits such as lifestyle
account, so you can see exactly how assist you with creating a financial plan offers, special access to reserved
your investments are performing. based on your risk profile. seating allocations for world class live
events, travel offers and savings on
You can keep up to date with your We can provide you access to online
health insurance, and more. To find
Plum Retirement Income account by and phone-based advice, at no
out more or to take advantage log
registering online at plum.com.au. additional cost to you. If you need
in to plum.com.au
Simply use your Member number, comprehensive financial advice,
included in Your Pension Has you can access personal face-to-face
Commenced letter, to register and advice via a licensed financial adviser.
log in. You’ll also be able to see To access these services, log into
other tools and information about plum.com.au or call us on
retirement at plum.com.au/education 1300 55 7586.
If you consult a financial adviser,
additional fees may be payable
to your financial adviser.
4. Risks of super and retirement income
Before you invest, there are some • changes in interest rates What’s your investment
things you need to consider. • defaults on loans timeframe?
How much risk you’re prepared to • company specific issues Many Australians will live up to a
accept is determined by various • liquidity (the ability to buy or sell third of their life in retirement so
factors, including: investments when you want to) this is an important question. There
• your investment goals • changes in the value of the is no single answer. You’ll generally
Australian dollar have a short investment timeframe
• the savings you’ll need to reach
for those investments intended to
these goals • investments and withdrawals by
support your income needs over the
• your age and how many years you other investors
next few years. You’ll generally have
have to invest • changes in Australian and a longer investment timeframe for
• where your other assets are overseas laws, and the investments needed to produce
invested • a counterparty not meeting its earnings over the long term so that
• the return you may expect from obligations eg when buying you can meet your future
your investments, and securities, the seller may not spending needs.
deliver on the contract by failing
• how comfortable you are with The risks that will be important to you
to provide the securities.
investment risk. over the short term and long term
are different. Three important risks
Investment risk Investment risk in to consider are:
retirement
All investments come with some • Volatility – an important risk over
risk. Some investment options will When you’re drawing an income
the short term because it could
have more risk than others, as it from your super savings in retirement,
cause the value of the investments
depends on an option’s investment the risks are different to those when
you need to draw on for your
strategy and assets. you’re making contributions to your
short-term income needs, to fall
super. The main risk when investing
suddenly. However, if invested
The value of an investment with a for retirement is that your savings
funds are not required for a long
higher level of risk will tend to rise will fall short of your income needs.
time, then, more often than not,
and fall more often and by greater That’s why your investment timeframe
investors can ride out the inevitable
amounts than investments with lower is one of the most important factors
highs and lows of market returns.
levels of risk, ie it’s more volatile. to consider when choosing your
Once members reach retirement
While it may seem confronting, investment approach. Your investment
and start a retirement income,
investment risk is a normal part of timeframe can vary depending on a
investment volatility can have a
investing. Without it you may not get range of factors including your age
significant impact on retirement
the returns you need to reach your and retirement goals.
funds and hence future income
investment goals. This is known as the It’s important to understand how potential. Significant market falls
risk/return trade-off. you feel about risk as it will help you early in retirement are difficult to
Many factors influence an investment’s in making your investment choice. recover from, especially if income
value. These include, but aren’t You’ll also need to weigh this up with continues to be taken at the same
limited to: your investment timeframe and your level. Portfolios with regular cash
retirement goals, including how you outflows are exposed to a subset
• market sentiment want to use your money in retirement. of market risk, called sequencing
• changes in inflation risk. Sequencing risk is the risk
• growth and contraction in that unfavourable investment
Australian and overseas economies returns occur when, or shortly
after, individuals have retired,
4. R
isks of super and retirement income (continued)
resulting in lower retirement funds. If you’re going to rely on your
Minimising this risk for short-term superannuation savings in retirement, Please note: The investment
timeframes shown in the table
investments is therefore important. your super may be invested for longer
are estimates only and are not
• Inflation – an important risk over than you think. With current life
a guarantee or recommendation
the long term as it is the chance expectancies, your superannuation of the investment timeframe that
that your retirement savings will may need to last you 20 years or is suitable for you. Your investment
lose their ability to buy the goods more if you retire when you’re 65. timeframe will depend on your
and services you need due to the We have used Rice Warner’s consulting individual objective, financial
rising cost of living. Inflation is the advice to assist with the analysis of situation and needs. A financial
the possible risk and return outcomes adviser can help you determine
rising cost of goods and services
for the Investment Paths in Plum the appropriate investment
as measured by the Consumer
timeframe for you.
Price Index (CPI). Minimising this Retirement Income. Rice Warner is
risk over the long term is therefore a trusted partner to many successful
important. organisations operating in Australia’s Detailed information on the factors
financial services sector. influencing an investment’s value,
• Longevity – is one of the biggest
risks facing members in the The table shows estimated investment and other risks, can be found in the
retirement phase. It refers to the timeframes based on current life ‘Things to consider before you invest’
risk of outliving your savings. expectancies in Australia. It gives you section on page 22.
Longevity issues arise as people an indication of how long your super
enter retirement, generally with may need to be invested if you’re
a fixed amount of money to fund planning to live off your super when
their retirement years, but with no you retire.
idea of how long they will live and,
therefore, no idea how long their Current Estimated investment
money needs to last. age timeframe (in years)
You may need to make different Male Female
investment choices to suit each
50 33 36
timeframe. For example, for the
60 24 27
money you will need over the next
2-3 years, you might choose an 65 20 22
investment option such as the Cash
Source: Australian Government Actuary
Fund (Pension) with a lower short-term Life Expectancy Tables 2015-17. Figures
risk level. For money you’ll need in have been rounded to whole years.
15-20 years, you may wish to consider
choosing an investment option with
a higher level of short-term volatility
than cash investments but greater
expected investment returns over the
medium to long term. For money you’ll
need beyond 20 years, you may wish
to consider choosing an investment
option that may carry greater risk
in the short to medium term but is
expected to provide superior returns in
the long term, as compared to a short-
term or medium-term option.
Risk/Return trade off
Risk vs Return comparison
When making an investment decision,
Retirement pension and Transition to retirement pension (retirement phase)
it’s important to understand the
relationship between expected risk
and expected returns, and how they Higher
differ over the short and long term.
Often investments that produce
Plum Active – Assertive
higher returns and growth in value
Plum Active – Moderate
over the long term tend to be more
Indicative returns
volatile in the short term. Investments
that produce lower returns over the Plum Active – Cautious
long-term are typically less volatile
and therefore better able to maintain
Plum Active – Conservative
stable values in the short term.
Generally, if you want to minimise
volatility, you’ll need to accept Cash Fund (Pension)
lower returns, whereas if you want Lower Higher
to maximise returns, you’ll need to Indicative volatility (risk)
accept higher volatility in returns.
The illustration shows indicative
returns and volatility for certain
Transition to retirement pension (pre-retirement phase)
investment options over a whole
market cycle. However, each market
Higher
cycle is different, so it isn’t possible to
accurately predict investment option
returns or their volatility. Depending Pre-mixed – Assertive
on the conditions at the time, actual Pre-mixed – Moderate
Indicative returns
returns and actual volatility could
be significantly different from Pre-mixed – Cautious
those shown.
Pre-mixed – Conservative
Cash Fund
Lower Higher
Indicative volatility (risk)
How long will your Plum Legislative change
Retirement Income Just as the Government makes rules, it
account last? can also change them. Superannuation
How long your Plum Retirement laws may change in the future.
Income account lasts depends International law changes can also
on many factors, including: impact your super. Your financial
adviser can help you respond to any
• the amount you initially invest
changes to laws on super, social
• the investment returns of the security and other retirement issues.
investment options that your
account is invested in
• the amount of income payments
you receive
• fees and costs charged to your
account, and
• any additional lump sum
withdrawals you make from
your account.
To learn more about how long
your pension may last please go
to https://moneysmart.gov.au/
retirement-income/account-based-
pension-calculator
5. H
ow we invest your money
We’ve appointed MLC Asset Selecting investment Self Select Investment Path
Management Services Limited to
options The Self Select Investment Path may be
advise on and manage our investment suited to you if:
options. They have extensive We’ve appointed JANA Investment
knowledge and experience in Advisers Pty Ltd (JANA) to advise us on • you feel comfortable selecting your
designing and managing portfolios our Investment Menu. JANA is one of own investment mix from a range
using a multi-manager investment the leading investment consultants in of investment options
approach. Australia with 30 years of experience
• you understand the fundamentals
and $850 billion of funds under advice
of investing, including the
Our portfolios have different (as at 31 March 2021). JANA is partly
difference between asset classes,
investment objectives because owned by IOOF Holdings Ltd.
eg cash, fixed income, property
we know everyone has different
The Investment Menu is regularly and shares, and
requirements about how their money
should be managed. reviewed by a committee of • you wish to customise your own
experienced investment professionals. investment strategy.
Our portfolios make sophisticated
investing straightforward. A number of factors are taken into In the Self Select Investment Path,
consideration when choosing the you can choose from the full range
Our investment experts, MLC Asset investment options. These may of investment options available to
Management Services Limited, include the investment objective, you, to suit your personal needs.
structure our portfolios to deliver fees, external research ratings, and You can allocate varying percentages
more reliable returns in many the performance of the investment of your account to one or more of
potential market environments. And, option and our ability to efficiently the investment options and switch
as their assessment of world markets administer the investment option. The between these investment options
changes, our portfolios are evolved selection of investment options issued at any time. More information about
to manage new risks and capture new by companies either wholly or partially each of these investment options
opportunities. owned by the IOOF Group is done on can be found on pages 31–40.
We use specialist investment an arm’s-length basis in line with our
Conflicts Management Policy. As with any investment decision,
managers in our portfolios. before you choose this Investment
Our investment experts research Path, it’s important to consider
hundreds of investment managers Choosing your
whether the strategy is suited to
from around the world and select the Investment Path your personal investment objectives,
managers they believe are the best To set up your Plum Retirement financial situation and needs.
for our portfolios. Our investment income account, you’ll need to choose
managers may be specialist in-house either the Self Select Investment Path
managers, external managers or a or the Cultivator Investment Path. You
combination of both. can only be invested in one Investment
Importantly, we stay true to the Path at any time. Please note: If you’re
objectives of our portfolios, so seeking a Transition to Retirement
you can keep on track to meeting income stream in a pre-retirement
your goals. phase, you can only invest in the Self
Select Investment Path.
5. How we invest your money (continued)
Cultivator Investment Path your short-term income needs income payment amount plus an
without having to worry about allowance for fees and costs will
The Cultivator Investment Path may
short-term market uncertainty be allocated to the Cash Fund
be suited to you if:
(volatility risk) (Pension) investment option.
• you’d like to rely upon and delegate • making sure that the allocation • Secondly, to provide some long-
to investment experts to the cash assets does not get too term capital growth and to tolerate
• you don’t need to make ad hoc big and become a drag on your moderate changes in value, an
or large withdrawals or rollovers long-term earnings (inflation risk) amount equivalent to six times
• your annual income payment • concurrently having a portion your nominated annual income
needs are 7% (or less) of your invested in actively managed payment amount will be allocated
account balance, and growth assets to help ensure to the Plum Active – Cautious
you can also meet your longer investment option.
• your starting account balance
is $200,000 or more. term spending needs (longevity • Finally, to grow retirement savings
risk), and and make them last as long as
In the Cultivator Investment Path, the possible, any remaining amount
• dynamically rebalancing the
objective is to help ensure you have of your account balance will be
amounts in each investment option
liquidity for your income payments and allocated to the Plum Active –
to ensure there is an appropriate
also maintain your balance, to enable Assertive investment option.
allocation based on short and long
you to meet your retirement goals by
term needs.
automatically and seamlessly moving
your account balance across three When you are invested in the Please note: We may change
investment options chosen for you. Cultivator Investment Path, we will how we rebalance investments,
monitor market returns and re-align or add or remove an investment
The Cultivator Investment Path works option that is in the Cultivator
your investments to maintain the
as intended when your annual income Investment Path, at any stage
balance between your short-term
needs are 7% (or less) of your account without prior notice to members.
and long-term goals.
balance, and your account balance We will notify you of material or
is at least $200,000. If you choose significant changes in accordance
a higher income payment or have
Initial allocation for with the law, which may be before
a lower account balance, this may Cultivator Investment Path or after the change. Up-to-date
information is available at
deplete your account balance faster. If you choose the Cultivator Investment
plum.com.au/forms-publications
In this instance, we recommend you Path from the commencement of your
The following examples are for
obtain personal financial advice to income stream, we will initially invest
illustrative purposes only and are
ensure this Investment Path is suited all monies into the Cash Fund (Pension) not an estimate or guarantee of
to your objectives, financial situation investment option whilst your account your account balance, the income
and needs. is established. payments that will be made to
you or the actual allocations that
How the Cultivator Depending on your nominated income
will be applied in respect of your
payment amount when you choose
Investment Path works the Cultivator Investment Path, your
account. Actual allocations may
differ due to regular provisioning
Your funds are initially allocated to money is then allocated to your goal of fee deductions from the Cash
the three investment options. The allocation in the three investment Fund (Pension) investment option.
allocation between the investment options as follows:
options has been carefully designed
• Firstly, to help you meet your
to meet your goals by:
income needs over the short term,
• investing in a pool of low-risk cash an amount equivalent to three
assets to help ensure you can meet times your nominated annual
Cultivator Investment Path Example: Initial allocation
John is 60 years of age and chooses to commence his Plum Retirement Income using the Cultivator Investment Path in May
with an initial account balance of $500,000. He decides that 5% of his account balance will provide him with a sufficient
income stream to meet his retirement goals, ie 5% x $500,000 = $25,000 is John’s nominated annual income payment amount.
John’s balance will be automatically invested as follows:
Cash Fund Plum Active - Plum Active -
(Pension) Cautious Assertive
Initial allocation to Initial allocation to Remainder of account
Cash Fund (Pension) Plum Active – Cautious balance allocated to
Plum Active – Assertive
3 x $25,000 = 6 x $25,000 = $500,000 – $75,000 –
$150,000 =
$75,000 $150,000 $275,000
5. How we invest your money (continued)
Quarterly rebalance When we rebalance, we only top
up the allocation to the Cash Fund
We’ll review your account on a
(Pension) and Plum Active – Cautious
quarterly basis and, where required,
investment options with a maximum of
automatically rebalance with the aim
six months-worth of income payments.
of preserving your account balance
Rebalancing will continue to be
according to your retirement goals
undertaken quarterly until the goal
for as long as possible.
allocation is achieved. So it could take
We perform this review on a some time to build up to your goal
quarterly basis in order to maintain allocation for your investments.
an appropriate mix of investments in
The quarterly rebalancing of assets
your account balance that meets your
between the Plum Active – Assertive
allocation goals. We rebalance taking
to Plum Active – Cautious investment
into consideration market fluctuations,
options and the Plum Active – Cautious
your account balance and your
to Cash Fund (Pension) investment
nominated annual income payment
options is mutually independent and
amount. The rebalancing will take
subject to the movement in the unit
place on or around the first Monday
prices of each investment option.
of every February, May, August
and November. There will be transaction costs
incurred following a rebalancing,
When investment returns but in order to minimise these costs
are positive to you, where both the Plum Active
– Assertive to Plum Active – Cautious
We’ll only carry out a quarterly
and Plum Active – Cautious to Cash
rebalance where the investment return
Fund (Pension) rebalances will occur,
in the Plum Active – Cautious and/or
we will net transactions. This means
Plum Active – Assertive investment
money can be transferred directly
options has been positive (ie where the
from the Plum Active – Assertive
sell unit price for that particular option
investment option to the Cash Fund
is higher than the sell unit price for
(Pension) investment option with
that investment option at any previous
the balance moving from the Plum
date where a quarterly rebalance
Active – Cautious investment
had occurred). This means that we’re
option to the Cash Fund (Pension)
only switching money out of the
investment option.
Plum Active – Cautious and/or Plum
Active – Assertive investment options
when there has been a positive return
and you’re not realising losses in a
negative market environment (unless
an extraordinary rebalance is required
as described on page 21).
Cultivator Investment
Path Example:
Quarterly rebalance Cash Fund Plum Active - Plum Active -
(Pension) Cautious Assertive
On the first Monday of August,
following when John opened his Amount invested in Amount invested Amount invested
Plum Retirement Income account, Cash Fund (Pension) in Plum Active – in Plum Active –
we reviewed his balance. His balance prior to quarterly Cautious prior to Assertive prior to
is now $513,000 and the allocation rebalance = quarterly rebalance = quarterly rebalance =
of his account in the Cash Fund $70,000 $153,000 $290,000
(Pension) investment option is $70,000.
Amount to be Amount required As both the Plum
In addition, the Plum Active – Cautious transferred: to be transferred: Active – Assertive
and Plum Active – Assertive investment from Plum Active – from Plum Active – to Plum Active –
options’ unit prices have risen from Cautious to Cash Cautious to Cash Cautious and Plum
the previous quarter and John now Fund (Pension) Fund (Pension) = Active Cautious to
Cash Fund (Pension)
has $153,000 of his account invested The lesser of: $5,000 rebalances will occur
in the Plum Active – Cautious (a) the difference at the same time, we
This will leave a
investment option and $290,000 of his between current balance of will net transactions
account in the Plum Active – Assertive allocation in
investment option. We will rebalance the Cash Fund $148,000 Amount to be
(Pension) of Amount to be transferred:
his account to achieve his allocation $70,000 and John’s from Plum Active –
transferred:
goal as follows: goal allocation from Plum Active – Assertive to Cash
of $75,000 (ie Assertive to Plum Fund (Pension) =
$5,000), or Active – Cautious
(b) s ix months’
$2,000
The lesser of:
worth of (a) an amount up Remaining allocation
income payments to the difference in Plum Active –
(ie $12,500) = between the Assertive after
quarterly rebalance =
$5,000 revised balance
of $148,000
Amount invested in and John’s goal
$288,000
Cash Fund (Pension) allocation
after quarterly of $150,000
rebalance = (ie $2,000), or
(b) 6
months-worth of
$75,000 income payments
(ie $12,500) =
$2,000
Net transfer amount
from Plum Active –
Cautious to Cash Fund
(Pension) =
($5,000 – $2,000) =
$3,000
Amount invested
in Plum Active
– Cautious after
quarterly rebalance =
$150,000
5. How we invest your money (continued)
When investment returns When you want to increase Cultivator Investment Path
are negative your annual income Example: Change in annual
In a period when sell unit prices in payment amount income payment amount
the relevant investment option(s) fall When you want to increase your John is now aged 70 years old and
below previous maximums, there will annual income payment amounts, has been invested in the Cultivator
be no quarterly re-balancing. we will top up the allocation to the Investment Path for 10 years. His
This will mean that the allocation of Cash Fund (Pension) and Plum Active balance is now $350,000. He wants to
your account balance in the Cash Fund – Cautious investment options with change his nominated annual income
(Pension) investment option might fall a maximum of six months-worth payment amount from 5% to 10% of
below three years-worth of annual of your nominated annual income his account balance each year, ie 10%
income payments and in the Plum payment amount at each rebalance x $350,000 = $35,000 is John’s new
Active – Cautious investment option date. The aim is to reach the new nominated annual income payment
might fall below six years’ worth of goal allocation over time rather amount. Reflecting the change in his
annual income payments, ie your than immediately topping up the full annual income payment amount, to
goal allocation. This is what is intended allocation at the next rebalance date. maintain an optimal allocation to meet
to happen. his retirement goals, we’ll need to
rebalance his account.
When sell unit prices again rise above
previous maximums, we’ll only top up
the allocation to these options with
six months-worth of annual income
payments. It may therefore take some
time to restore the original three
years’ worth or six years’ worth of
income payments in the Cash Fund
(Pension) investment option and the
Plum Active – Cautious investment
option respectively.
When you no longer have
investment in Plum Active
– Assertive investment Cash Fund Plum Active - Plum Active -
(Pension) Cautious Assertive
option
When you no longer have any New goal allocation New goal allocation Remaining allocation
balance in the Plum Active – Assertive in Cash Fund in Plum Assertive – in Plum Active –
(Pension) Cautious Assertive
investment option, we’ll no longer
be able to rebalance any investments Remainder
back into the Plum Active – Cautious 3 x $35,000 = 6 x $35,000 = $350,000 – $105,000 –
investment option. $210,000 =
$105,000 $210,000 $35,000
When you elect to Extraordinary rebalance
have income payments If your investment in the Cash Fund (Pension) investment option falls to very low
suspended levels due to a few continuous cycles of negative returns or because you have
If you elect to have your income requested a large withdrawal, we’ll partially re-balance your holdings from Plum
payments suspended (subject to having Active – Cautious, irrespective of the unit price movement of the options. This is to
met the legislative minimum payments ensure you’ll have enough money in the Cash Fund (Pension) investment option to
for the year – see page 51 for more fund immediate income payments. Similarly, if your investment in the Plum Active
details), your account will still go – Cautious investment option falls to very low levels we’ll partially rebalance your
through any quarterly rebalancing that holdings from Plum Active – Assertive irrespective of the unit
may occur based on the most recently price movement in the investment options.
elected income payment amount.
Low levels in... Cash Fund (Pension) Plum Active – Cautious
For more examples of how the investment option investment option
Cultivator Investment Path works, go For members with payment If less than three months’ If less than six months’
to page 17 and plum.com.au/pension frequencies of weekly, worth of income payments worth of income payments
fortnightly, monthly or we’ll allocate an additional we’ll allocate an additional
quarterly three months’ worth of six months’ worth of
Reverse rebalance income payments income payments
There may be instances where the
For members whose If less than six months’ If less than 12 months’
balance of your account invested in the payment frequency is worth of income payments worth of income payments
Cash Fund (Pension) or Plum Active – six monthly we’ll allocate an additional we’ll allocate an additional
Cautious investment options may build six months’ worth of 12 months’ worth of
up to relatively high levels. This may income payments income payments
be due to strong investment returns, For members whose If less than 12 months’ If less than 24 months’
a reduction in your requested annual payment frequency is worth of income payments worth of income payment
income payment or a suspension of annually we’ll allocate an additional we’ll allocate an additional
income payments. As this build up can 12 months’ worth of 24 months’ worth of
reduce the long-term earning potential income payments income payments
of your investment we try to limit it.
If extraordinary rebalancing is required to restore funds, any sale of assets to restore these
Where there is in excess of four years’ funds may lead to capital losses if the value of investments has fallen during the period
worth of income payments invested leading up to the extraordinary rebalance date. You’ll be notified of any extraordinary
rebalancing by mail or by logging in to your account at plum.com.au
in the Cash Fund (Pension) investment
option, we’ll re-invest some of that Switching investments
money into the Plum Active – Cautious
If you’ve chosen the Self Select Investment Path, you can change your investment
investment option, irrespective of unit
options any time. We don’t charge a fee for you to do this. However a buy-sell
prices. We will leave 3.5 years-worth of
spread may apply. See page 46 for more information on buy-sell spreads.
income payments invested in the Cash
Fund (Pension) investment option. If you’re invested in the Self Select Investment Path and later decide that you
would like to invest in the Cultivator Investment Path, we will invest your account
Where there is in excess of eight years’
balance as outlined in the Initial allocation for Cultivator Investment Path section.
worth of income payments invested in
As a result, you may incur buy-sell spreads. Note, each time you switch into the
the Plum Active – Cautious investment
Cultivator Investment Path, the quarterly rebalancing rules will reset as if you are
option, we’ll re-invest some of that
a new investor in the Investment Path.
money into the Plum Active – Assertive
investment option, irrespective of unit If you’re invested in the Cultivator Investment Path and later decide to switch out
prices. We’ll leave seven years’ worth of this Investment Path, you must switch all of your account balance out of the
of income payments in the Plum Active Cultivator Investment Path and then switch into the Self Select Investment Path.
– Cautious investment option. As a result, you may incur buy-sell spreads.
5. How we invest your money (continued)
You can switch between investment Monitoring of frequent We calculate the unit price as at the
options or Investment Paths by logging end of each business day and use
switching
in to your account on plum.com.au or robust unit pricing policies to do
by completing the Plum Retirement This product is not appropriate for this. The unit price will reflect the
Income investment switch and members who wish to switch their performance of the underlying assets,
strategy change form available at investments frequently in the pursuit income earned, fees, expenses and
plum.com.au/forms-publications or of short-term gains. taxes paid and payable. We may
call us on 1300 55 7586 and we will We monitor all investment options for however suspend prices in order to
send you a form. abnormal transaction activity because ensure equity between investors if
this sort of activity can have adverse we don’t believe we can accurately
Delayed and suspended impacts for other members. calculate a price for a particular day.
transactions An example of this would include
To maintain equity, we have the right
when one or more of the major
We may delay or suspend transactions, to deal with members who frequently
stock exchanges are closed.
for example where an investment switch by:
manager delays or suspends unit
pricing, or when there are adverse
• delaying, limiting, rejecting Things to consider
market conditions.
or applying special conditions before you invest
to future switch requests
We may process withdrawal and Volatility
• permanently cancelling
switch requests in instalments membership Periods of volatility can be unsettling
over a period of time and may also and may occur regularly. You may
• rejecting applications to open new
suspend processing of withdrawal find it reassuring to know that, often
accounts in the Fund, and/or
and switch requests we have received. investments that produce higher returns
In certain circumstances we may • rejecting contributions and and growth over long periods tend to
refuse a request. Where requests rollovers to existing accounts be more volatile in the short term.
are delayed, suspended or being
By accepting that volatility will occur,
paid in instalments, the unit prices Withdrawals from the fund
you’ll be better able to manage your
used for transactions will be those The transaction will generally be reaction to short-term movements.
available on the day the transaction processed using the unit price for This will help you stay true to your
takes effect, rather than the day of the day the Trustee receives relevant long-term investment strategy.
the request. In the event that the documents and all requirements have
Investment Option becomes illiquid, been met. When choosing your investment,
you may only withdraw your funds in it’s important to understand that:
accordance with any withdrawal offer How your account is valued • its value and returns will vary
that we make. We are not responsible
When money is paid in to your over time
for losses that delayed or suspended
account, units are allocated to your • assets with higher long-term return
transactions may cause.
account and when money is paid out, potential usually have higher levels
units are deducted from your account. of short-term risk
The value of your account is based on
• returns aren’t guaranteed and you
the number of units in your chosen
may lose money, and
investment option(s), and the price
of those units. • future returns will differ from
past returns.
The overall value of your account will
change according to the unit price
and the number of units you hold.
Diversify to reduce volatility and One of the most effective ways of
other risks reducing volatility is to diversify Diversification across asset
across a range of asset classes. classes is just one way of
Diversification — investing in a range of
managing risk. We also diversify
investments — is a sound way to reduce across investment managers.
the short-term volatility of a portfolio’s A financial adviser can help you
returns. That’s because different types clarify goals and assist with
of investments perform well in different creating a financial plan which
times and circumstances. When some helps you manage risk and
are providing good returns, others consider issues such as:
may not be. • how many years you have
to invest
Portfolios can be diversified across • the savings you’ll need to reach
different asset classes, industries, your goals
securities and countries, as well as • the return you may expect from
across investment managers with your investments, and
different approaches. • how comfortable you are with
The more you diversify, the less impact volatility.
any one investment can have on your
overall returns.
Types of assets
Asset classes are commonly grouped as defensive or growth, based on their different characteristics.
Defensive assets, such as cash and fixed income, may help provide positive returns in a portfolio when share markets
are weak. On the other hand growth assets, such as shares and property, may be included in a portfolio because of their
potential to produce higher returns than cash in the long term.
Diversified investment options are usually invested across both defensive and growth assets because their risk and return
characteristics tend to be diverse. However in some market conditions, all types of assets may move in the same direction,
delivering low or negative returns at the same time.
The main differences between defensive and growth assets are:
Defensive Growth
How they are generally used To stabilise returns and generate To provide long-term capital growth and
income. income.
Risk and return characteristics Expected to produce lower returns, and Expected to produce higher returns, and
be less volatile, than growth assets over be more volatile, than defensive assets
the long term. over the long term.
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