Cessation of NTGPASS Pension Product: NTG-P33-V01

This fact sheet outlines information on the cessation of the NTGPASS account-based pension (ABP) product. No new NTGPASS ABPs are available from 1 April 2014. The intention is to transfer existing pension members to an alternative arrangement later in the year at a date yet to be determined.

Why is the pension ceasing?

The take up of the NTGPASS pension has been modest since introduction in March 2008. Continued support of the pension product would mean a significant increase in fees to pension members.

Many superannuation funds and financial institutions provide pension products, and because of their size can offer similar, if not significantly better, services at lower costs. These services include on-line facilities, which cannot be provided through NTGPASS.

While it is regrettable, the decision to cease providing the NTGPASS pension product has been made in the best interest of members.

What should I consider?

If you are in receipt of an NTGPASS pension, you should consider what you want to do with your pension account balance.

The Commonwealth pension deeming rules will change from 1 January 2015. Changes will align the income test treatment of account-based superannuation income streams with the deemed income rules applying to other financial assets.

Account-based income streams held by income support recipients immediately before 1 January 2015 will continue to be assessed under the previous rules unless recipients choose to change to a product that is assessed under the new rules. It is preferable that members’ new pension arrangements are in place by this date.

What are my options?

You are not required to take any action at this stage, however you may choose to do any of the following:

• transfer your pension account balance to an alternative superannuation provider of your choice;
• transfer your pension account balance to an NTGPASS retained account. Please bear in mind that investment returns on funds held in a pension account are tax-free, while investment returns on superannuation accounts are taxed at up to 15%;
• withdraw lump sums and/or the balance of your NTGPASS pension account (subject to preservation rules);

Please note if you are aged 65 or older and have stopped working, Commonwealth legislation prohibits you from making personal contributions to superannuation. In order to transfer your money to another superannuation fund, it must be rolled over as superannuation money directly from your NTGPASS account.

What’s next?

Later in the year the pension product will be closed. Remaining members with a pension account balance will be advised of an alternative arrangement into which their pension balance will be transferred.

The assessment process to determine an appropriate alternative arrangement is currently underway.

Pension members will be provided further detail about the alternative arrangement and an opportunity to elect a different option in due course.

You can do nothing and wait for the alternative arrangements to be finalised, or you can consider your options and make a choice.

Does this affect active NTGPASS members?

No. There is no change to NTGPASS benefits.

Who is affected?

NTGPASS members who were looking to take an NTGPASS ABP will now have to use an alternative provider. There are many retail and industry funds offering such products.

Existing NTGPASS ABP members can continue to maintain their account for the time being but the intention is to move them to an alternative arrangement.

Are there any fees in moving to another ABP?

Each fund sets its own fees but in general do not charge joining or entry fees.

NTGPASS does not charge an exit fee. However, the annual account-keeping fee is deducted from your account on 30 June each year or when you exit the scheme. If you exit the scheme during the financial year, the fee is calculated on a pro-rata basis.

Is there any difference in taxation of the NTGPASS ABP compared to other providers?

No. All ABPs are taxed in the same manner in accordance with Commonwealth taxation legislation.

Is there a difference in the returns from a pension account compared to a superannuation account?

Yes. Investment returns on funds in a superannuation account are taxed at up to 15%, while investment returns on a pension account are tax-free.

Can I ‘top up’ my pension account with additional funds?

No. You cannot add funds to your existing pension account as this is considered to be commencing a new pension.

Can I still switch investment options and make lump sum withdrawals?

Yes you can still make switches and withdrawals, subject to the rules of the fund.

Useful Information

Online tools and websites are available for you to research and compare the features and costs of different funds. Some websites charge a fee for use of these tools, while others offer similar resources for free.

You can find information on:

https://www.moneysmart.gov.au/superannuation-and-retirement

http://www.superguru.com.au/

http://www.chantwest.com.au/

http://www.canstar.com.au/superannuation

Keep in contact with us

Please remember to keep us informed if you change your address or other contact details to ensure that you continue to receive updates and be aware that we cannot provide personal financial advice. If you require assistance, you can seek the services of a qualified professional.

Disclaimer

The material in this fact sheet is provided for information purposes only. It does not take into account your personal circumstances and should not be relied upon for making financial commitments.

The Commissioner of Superannuation and the Northern Territory of Australia accept no responsibility for any losses arising from any use or reliance upon the information or conclusions reached using the information.