A raft of significant changes to superannuation rules that will come into effect on July 1, 2017 threaten to limit the effectiveness of the retirement income product to the point where retirees might need to consider other investments if they’re to enjoy their golden years.
This news comes hot on the heels of the January 1, 2017 changes to the age pension, amendments that collectively represent arguably the biggest shake up to the retirement income system in the last 10 years. It is simply a case of the government giveth and the government taketh away, with some winners and some losers. This is evident with some age pensioners having lost up to $9,000 per annum from January 1, 2017 and the focus moves to the top end of town.
This has prompted a shift in buyer behaviour in order to combat these changes, with KeyInvest seeing an increase of over 200% in sales of our asset exempt Funeral Bond due to the age pension benefits it can deliver.
Financial adviser enquiry into tax-effective alternatives to superannuation has also increased, driven by the lower limits on voluntary contributions to super, changes to transition to retirement rules and other adjustments to super’s rules that come into effect on July 1, 2017.
To take advantage of these changes, KeyInvest has recently made significant improvements to its investment bond, the KeyInvest Life Events Bond (LEB), which now offers investors 27 investment options from 11 fund managers across the country, many of them household names in the sector.
Investment Bonds are widely considered the next best thing to superannuation from a tax point of view, especially for those on marginal personal tax rates above 30% as it allows them to enjoy potentially significant tax benefits. This is due to the fact investment bonds are a tax-paid investment, with the tax paid by the issuing company rate of 30%, which is considerably lower than a marginal tax rate that can be as high as 45 %.
Investment bonds are an increasingly important alternative of the retirement saving system, providing a retirement income stream in addition to the aged pension and superannuation. With all the changes and uncertainty in these other areas, those worried about running out of money in retirement are seeing investment bonds as a third leg that gives them greater security.
KeyInvest tailors products to meet its customers’ individual needs and helps them to plan for the future and achieve their goals. If you are looking for further information on one of our products please contact one of our friendly sales assistants on 1300 658 904.
Andrew Meinel, General Manager of Financial Services, KeyInvest
The information contained in this publication is based on the understanding KeyInvest (ABN 74 087 649 474 AFSL No. 240667) has of the relevant Australian legislation as at the date shown in this publication.
The information contained in this publication is of a general nature only and is intended for use by financial advisers and other licensed professionals only. It must not be handed to clients for their keeping nor can any copies of sections of this publication be given to clients. KeyInvest is not a registered tax agent under the Tax Agent Services Act 2009. We recommend that your client be referred to their registered tax agent or legal adviser prior to implementing any recommendations that you may make based on the information contained in this publication.