The MyNorth Lifetime Income Account is a new market-linked pension product designed for financial advisers to help clients transitioning to retirement shift from capital accumulation to income generation, providing a guaranteed income for life.
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for clients nearing retirement the
biggest mindset change is transitioning
from accumulating Capital to generating
an ongoing income the my North lifetime
income account offers a new way for
financial advisers to frame these conversations
conversations
this Innovative Market link pension
account is designed to pay income for
the life of a single member or couple no
matter how long they live the account
generates income for Life thanks to an
annual bonus and for financial advisors
the my North lifetime income account is
a market first contemporary retirement
income solution that keeps you in
control of client outcomes in this video
we will look at the role of the death
and exit benefit introduce you to the
annual bonus and outline the maximum
income rate and how it's
calculated the minor lifetime income
account generates lifetime income
through an annual bonus rate said from
the start these bonus rates increase
with age comprising a larger and larger
portion of the total income a member
receives but before we get into how it
works we must first understand how
Capital Access Works in a lifetime income
income
account members can choose to opt in to
a death and exit benefit this benefit
defines the amount payable to a member
or their beneficiaries in the event of
death or exit from the account the death
and exit value is generally equal to the
commencement balance less any income
received a figure called the money back
amount let's consider an
example for simplicity's sake will'll
assume income is drawn once at the end
of each year and there are no changes to
asset allocation a client depositing
$100,000 into a lifetime income account
plans to take $7,000 in annual income
assuming they receive 6% per year in
investment earnings in the first year
their account balance would therefore
increase INE by $6,000 due to investment
earnings and fall by $7,000 due to the
$999,000 separately the money back
amount in this example would equal the
initial $100,000 deposit less the $7,000
$93,000 Fast Forward 10 years and the
client's account balance would would be
just under
$887,000 while the money back amount
would be
$30,000 that's because they have
withdrawn $70,000 in income during that
period simply deducted from the initial
deposit regardless of actual balance
movements remember the death and exit
benefit can't be higher than the account
balance and is also limited by the
legislated Capital Access schedule let's
return to our $100,000 initial deposit
example a client with a 20-year life
expectancy would see their Capital
Access schedule decrease to zero after 20
20
years the death and exit benefit will be
equal to the lower of the money back the
account balance or the Capital Access
schedule in the event of death or exit
the benefit will be paid to the member
or their nominated beneficiaries the
remaining portion of of the account
balance will then be paid to our
insurance partner as a one-off premium
payment this is important because each
year the applicable annual bonus rate is
multiplied by the difference between the
account balance and the death
benefit it is a combination of that
value and the annual bonus percentage
rate which dictate the dollar value of
the annual bonus to be added each year
to a lifetime income accounts balance we
are now going to build in the annual
bonus so back to our example using the
death and exit bonus rate if the client
is eligible for a 1% annual bonus in the
first year this will be multiplied by
the difference between their account
balance and their death
benefit in this case the year one annual
bonus would be
$60 this will then be added to their
account balance at the end of the
financial year
after 10 years the annual bonus rate
will be
3.5% which would again be multiplied by
the difference between the account
balance and the death
benefit this time the annual bonus would
be almost
$2,000 which is again added to the
balance for that year fast forward
another 20 years and their annual bonus
rate would be
177% if at that point they had an
account balance of $660,000 and a death
benefit equal to $0 their annual bonus
rate would be multiplied on the full
$10,200 the annual bonus would continue
to top up their account ensuring that
the balance never runs out and that they
had income for life no matter how long
they live
for now there's just one more section to
cover the income rate
R like the annual bonus rates the
maximum annual income rates are set from
the start and increase as you get older
however unlike the annual bonus rates
the income rate is Multiplied against
your full account balance at the start
of each Financial year for example if a
client has an annual income rate of 7%
and an account balance of
$100,000 They will receive $7,000 of
income bringing it all together the
annual income and bonus rates have been
designed in conjunction with one another
as such if a member was to receive 6%
annual investment returns and draw the
maximum allowable income they would
receive the same income the following
year when investment returns are lower
than 6% the income will be
proportionately lower the following year
when investment returns are higher than
6% the income will be proportionately
higher the following
year there is also a couples option
which has a separate set of income and
bonus rates and ensures the income
spouse the minor lifetime income account
provides clients the comfort and
confidence of higher retirement incomes
that never run out
it utilizes Innovative features
including annual bonuses maximum annual
incomes reversionary options and assets
and income test discounts to underpin this
this
commitment to learn more about my nor
lifetime Solutions and their benefit for
advisors and their clients please view
the full range of videos in this series
from how the asset test benefits work to
maximize age pension to the Dynamics of
creating income for life we provide all
the details you need when engaging with [Music]
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