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1. Defined Benefit Fund

   • Offers a guaranteed benefit at retirement based on your salary and years of service.
   • Not directly tied to investment market performance.
   • Generally low-risk and provides predictable retirement income.
   • Typically includes features like indexing to inflation.
   • Often less flexible, with restrictions on withdrawing funds early or rolling over.

2. Accumulation Account

   • Your retirement balance grows based on contributions and investment returns.
   • Higher potential for long-term growth due to compounding, but also subject to market fluctuations.
   • You control how the funds are invested, which means more flexibility but also more responsibility.

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Key Factors to Consider

1. Guaranteed Benefit Value

   • Check the projected payout from your DB fund at retirement. This projection should consider indexing for inflation. Compare this to the potential growth you might achieve if you rolled the $400,000 into your accumulation account.

2. Risk Tolerance

   • If you roll your DB funds into an accumulation account, you expose yourself to market risk. While long-term returns can be higher, there is no guarantee of the same security as a DB payout.

3. Compound Interest in Accumulation Fund

   • Rolling into your accumulation fund would immediately increase your investment base from $100,000 to $500,000. Over 15+ years, the growth could potentially outpace the benefits of your DB fund, but this depends on the rate of return on your accumulation investments.

4. Inflation Protection

   • Many DB funds are indexed to inflation, which protects the purchasing power of your benefit. In an accumulation account, your returns may outpace inflation, but there's no automatic protection.

5. Exit Penalties or Fees

   • Verify the financial impact of exiting your DB fund. Some funds impose penalties or offer reduced benefits if you roll out early.

6. Flexibility

   • With a DB fund, you’re locked into a specific payout structure. An accumulation account offers more control over when and how you access funds in retirement.

7. Longevity Risk

   • A DB fund guarantees lifetime income, regardless of how long you live. In an accumulation account, you bear the risk of running out of funds if you outlive your savings.

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Steps to Take Before Deciding

1. Request a Projection

   • Contact your DB fund provider for a detailed statement of your expected benefits at retirement. Ensure it accounts for inflation adjustments.

2. Speak to a Financial Planner

   • A planner with expertise in superannuation can compare the guaranteed DB payout to the potential returns of rolling into an accumulation account based on your investment profile and market assumptions.

3. Calculate Potential Growth in Accumulation Account

   • Estimate the growth on $500,000 using reasonable return rates (e.g., 6%-8% per year). Consider investment fees and market risks.

4. Check Tax Implications

   • Rolling over your DB fund might have tax consequences, depending on the structure of your funds.

5. Consider Retirement Timeline

   • At 50, you’re likely 10-15 years away from retirement. The closer you are to retiring, the more valuable the certainty of a DB payout becomes.

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General Advice

• Stay in the DB fund if:
  • The projected benefit offers a secure, inflation-adjusted income for life that matches or exceeds your anticipated needs.
  • You’re risk-averse and value guaranteed income over market-dependent growth.
• Roll into accumulation if:
  • You’re comfortable with market risk and believe the potential for higher returns in an accumulation account aligns with your goals.
  • You want more flexibility and control over how your retirement funds are invested and accessed.

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Practical Example

Assume:

• DB fund offers $40,000/year indexed to inflation for life starting at 65.
• Rolling into accumulation, you invest $500,000 at 6% average annual return.
• DB: Predictable income of $40,000/year for life.
• Accumulation: $500,000 grows to ~$1.2M in 15 years (6% growth), giving ~$48,000/year (4% safe withdrawal rate).

If you’re healthy and expect a long retirement, the DB fund’s lifetime guarantee may still win, especially with inflation indexing.