Centuria LifeGoals – Target Market Determination (TMD)

Target Market

The Target Market is the class of persons who are the type of customer set out below, who have the needs and objectives set out below and are in the financial situation set out below.

Needs and Objectives of Customer

Note: this section relates to the requirements of s994B(5)(b) of the Act.

Approach to Target Market

TMD indicator key

The Consumer Attributes for which the product is likely to be appropriate have been assessed using a red/amber/green rating methodology with appropriate colour coding:

Instructions

In the tables below, Column 1, Consumer Attributes, indicates a description of the likely objectives, financial situation and needs of the class of consumers that are considering this product. Column 2, TMD indicator, indicates whether a consumer meeting the attribute in column 1 is likely to be in the target market for this product.

Generally, a consumer is unlikely to be in the target market for the product if:

• one or more of their Consumer Attributes correspond to a red rating, or
• three or more of their Consumer Attributes correspond to an amber rating.

Type of Customer

The customer can be an individual, joint owner, company or trust.

The customer is seeking to benefit from any of the above-mentioned product attributes.

This product is not considered in the target market for superannuation funds as both superannuation and investment bonds are tax paid, with superannuation at a lower rate of 15%.

Customer objectives

This product is suitable for customers seeking any one or more of the following objectives to invest in a tax paid (capped at the life insurance rate of 30% less allowable deductions) investment that:

• has no additional tax after 10 years (with investors benefiting from a 30% rebate where earnings are withdrawn within 10 years);
• no contribution caps in the initial year of investment;
• enables the achievement of investment returns without increasing your assessable income or impacting your entitlement to social securities benefits;
• allows for additional contributions (subject to the 125% rule);
• allows beneficiaries to be nominated outside an investor’s estate to provide certainty for estate planning;
• allows investors to establish a long-term regular savings plan, helping them reach a long-term savings goal for a key event or as supplement to superannuation with the benefit of accessibility pre-retirement;

Investors in this product will get certain tax benefits if the product is held for the long term (10 years) and investors should have a medium to long term investment horizon unless the bond is taken out for the following objectives:

• Tax deferral – holding their investments in the tax effective structure whilst they are on a higher tax bracket and redeeming (with the 30% tax offset) when in a lower tax bracket;
• Investing for a specific life event, the timing of which may be shorter;
• Estate planning;
• Social security planning;
• To establish savings discipline;
• Comfortable with utilising the tax neutrality established by the way of the 30% tax offset on investment earnings if the Bond withdrawn early.

This product is not suitable for:

• Superannuation contributions
• Investors seeking regular income distributions calculated and paid by the product issuer¹;
• Investors who are investing for retirement and who have not reached their superannuation contribution cap for a particular year or lifetime contribution cap and do not need access to their money pre-retirement;
• Investors who are on a zero tax rate or the lowest marginal tax bracket and cannot benefit from the rebate should not invest unless it’s for a specific non tax related outcome such as an estate planning strategy.

1. Investor could set up their own distributions but that would require them to be comfortable with calculating and making those withdrawal requests

Level of decision making

Product investment menu

Desired number of investment holdings

Financial situation of customer

Life stage of customer

Intended size of investment

Investment Timeframe

Access to Capital

Investors may redeem their investment at any time (subject to a minimum withdrawal of $500).

Under normal market conditions withdrawals are processed within 14 days of receiving a withdrawal request.

For withdrawals made within the first 10 years, the investment earnings of the bond will be taxed at the investors marginal rate, however, a tax offset of 30% can be claimed against this income (effectively neutralising the tax position).

Customer selected investment options

This section of the TMD is relevant to customers who chose one or more investment options when entering the product (that is, customers that do not rely on the default investment option).

This product is consistent with a target market of investors that wish to choose their own tolerance for risk.

The risk levels of each investment option are disclosed in the PDS and on the investment bond platform. They are also available as an Appendix to this TMD These risk levels correspond to the Standard Risk Measure (SRM) jointly developed by the Financial Services Council (FSC) Association of Superannuation Funds of Australia (ASFA). The available investment options cover all SRM risk levels.

Investment diversification

Investors have 31 investment options to select from many of which provide investors with access to a diversified portfolio of assets that they would not be able to access in their own right. Where the investor has selected a diversified investment option(s) further diversification might not be required.

Where an investor invests in a sector specific fund, investor should consider diversifying their investment across multiple investment choices within the LifeGoals menu or otherwise across their investable assets outside of superannuation.

For all funds with that have a High or Very High Risk and Return profile, investors also should consider diversifying across multiple investment options within the Product investment menu or otherwise across their investable assets outside of superannuation.

The underlying investment options are suitable for a range of risk and return profile for the investment bond allocation of funds. The product should be assessed against the consumer’s attributes for the relevant portion of the portfolio, rather than the consumer’s portfolio as a whole.

Other elements of TMD

Appropriateness requirements

Note: this section relates to RG 274.64–66

Explanation of consistency of key attributes with TMD

This product is suitable for a broad range of investors seeking to achieve one or more of the objectives noted in the investment section. The product enables investment both up front and by additional investment to accumulate an investment balance in a tax paid structure and provides investors with a range of underlying investment options with different risk and return profiles.

Tax is paid within the bond structure, capped at the life insurance rate of 30% less allowable deductions. There is not additional tax in the hands of the investor if withdrawn after 10 years, however there is a 30% tax offset that is applicable should the investor wish to withdraw within the 10 year period effectively neutralizing the tax position should the investor require early access.

There is no restriction on access to the investment. Investors may make additional contributions of up to 125%, however there is no obligation to do so it is suitable for investors who wish to make a single contribution or multiple contributions over time.

Distribution Conditions/Restrictions

Note: this section relates to the requirements of s994B(5)(c) of the Act

Review Triggers

Note: this section relates to the requirements of s994B(5)(d) of the Act

Where the issuer of the TMD has determined that any of the following has occurred:

a) ASIC reportable significant dealing outside of TMD.

b) Significant or unexpectedly high number of complaints (as defined in section 994A(1) of the Act) regarding product design, product availability or any distribution condition where the product issuer considers this reasonably suggests that this TMD is no longer appropriate.

c) Material change to key product attributes, terms and/or conditions where the product issuer considers this reasonably suggests that this TMD is no longer appropriate.

d) The use of Product Intervention Powers, regulator orders or directions in relation to the distribution of this product where the product issuer considers this reasonably suggests that this TMD is no longer appropriate.

e) A significant breach event relating to the design or distribution of this product where the product issuer considers this would reasonably suggest that (i) this product is unsuitable for a particular cohort of customers and (ii) the TMD may no longer be appropriate.

f) A significant or unexpectedly high number of clients do not receive discounted tax treatment upon withdrawal (e.g. withdrawal prior to the 8th year of the investment being initiated.)

Maximum period for reviews

Note: this section relates to the requirements of s994B(5)(e) and (f) of the Act.

Note: The issuer of a new product should consider whether shorter review periods are appropriate.

The review period allows for the collection of data for 1 year/3 years, plus three months for the completion of the review.

Distributor Information Reporting Requirements

Note: this section relates to the requirements of s994B(5)(g) and (h) of the Act.

* Quarterly reporting is due 10 business days after the end of the March, June, September and December quarters.

If practicable, distributors should adopt the FSC data standards for reporting to the Issuer. The reporting templates are available on the DDO resource page of our secure Adviser site  (registration required).