If you select the Easy Default option when opening an NGS Income account, the default investment strategy will apply, and your savings will be invested into two ‘buckets’ — your ‘cash bucket’ and your ‘growth bucket’.
Cash and Term Deposits
12% will be invested into your cash bucket. Your fortnightly income will be drawn from this bucket.
The remaining 88% will be invested in Retire Plus which is designed to deliver sound long-term returns.
The cash bucket is designed to meet your income needs and help manage risk in retirement by minimising the need to draw funds from your growth bucket during any market downturns in the first two years of retirement.
The growth bucket is designed to deliver returns with less volatility than listed shares or a traditional balanced fund. Retire Plus invests in diversified assets designed to deliver a steady income and with improved stability of returns over the long term.
For members below age 75, your regular payments will be made from your cash bucket at an amount of 6% p.a. of your initial account balance.1 The dollar amount of payments in the first year will remain the same in future financial years, and will be adjusted where required to meet minimum required payments.2 If you’re aged 75 or above and opt into Easy Default, your payments will be paid at the minimum required level.
When your cash bucket is nearly empty, we’ll let you know so you can choose to top it up if you wish. You also have the flexibility to choose another investment strategy if your needs change.
Here's an example of how the bucket strategy works
Kate is 67 and sets up an NGS Income account with a balance of $375,000.
She chooses Easy Default, as she’s looking for an investment strategy that takes the guesswork out of choosing investments, and provides a regular, stable income in retirement.
12% of her balance ($45,000) is invested in Cash and Term Deposits. The remaining 88% of her balance ($330,000) is invested in Retire Plus. If there are any market falls in the first two years of her retirement, Kate won’t be drawing money from Retire Plus (her ‘growth’ bucket), allowing this option to remain invested and generate returns.
Kate receives a regular income payment each fortnight of around $865 (6% of her initial account balance, divided by the number of fortnights in the year). 26 fortnightly payments are used in this example, this may vary from year to year.
She’ll continue to receive the same payment amount unless she requests a change, or her payments are adjusted to meet the minimum legislated payment amount.
1 For members below age 75, the dollar amount of payments in the first year will continue to apply in future financial years until you tell us otherwise (subject to meeting minimum legislated payment limits). For members aged 75 or above the minimum legislated percentage payment amount will apply.
2 Where you join during the financial year, your annual payment amount will generally be pro-rated based on the number of payments remaining in the first financial year.