We hear a lot about inflation being very low at the moment, just 1.00% in fact for the year to 30 June 2016 but have you thought about what your household’s inflation rate is? Depending on what goods and services you buy, your hip pocket may have been hit a little harder.

A helpful analogy is to think about Australia as the driest inhabited continent in the world. It’s true but try and tell that to the many Australians who have had their houses flooded or collapse into the ocean due to the large winter storms and rainfall through winter and early spring. Then there are the farmers with lost or damaged crops and property this winter season which recorded our second highest winter rainfall ever. Did I mention we are the driest inhabited country in the world?

The pending changes to the age pension asset test that will leave hundreds of thousands worse off has prompted a rush on products such as funeral bonds and other asset exempt options as older Australians look to cushion the blow.

That’s the word from Andrew Meinel, General Manager of Financial Services at KeyInvest, who said the changes – along with financial advisors recommending funeral bonds as an effective safeguard – have seen a 25 per cent growth in this area over the past few months.

And, he predicts, the clamour will increase as the change date of 1 January 2017 nears.

Financial Advisers can now apply for the KeyInvest Funeral Bond online. This new initiative has been welcomed by advisers as demand for Funeral Bonds reaches an all-time high due to the changes to the Asset test that commence 1 January 2017.

Significant enhancements have been made to the Life Events Bond (LEB) including increasing the investment choice to 27 investment options from the current 8 options.

Andrew Meinel General Manager Financial Services says “KeyInvest has responded to client and financial adviser feedback and given the LEB a significant overhaul to improve client outcomes”. The changes include making automatic increases to regular savings plans (RSPs) available to make sure RSPs keep pace with inflation or to maximise the tax benefits under the 125% rule.

Legislative changes will mean that advisers need to re-assess the way they structure a client’s retirement portfolio. Advisers need the back up of more dynamic strategy support to stay ahead of the changes. Investors are expected to look beyond super to fund their retirement and this will affect the strategies that advisers utilise for their clients to deliver a customised solution based on the more complex and specific situation of their clients.

How changes in the Age Pension may affect you

If you are over, or close to the age of 65, it is important to understand the changes to the age pension asset test that come into force from 1 January 2017. These changes are significant and may affect the amount of pension you receive. While a small number of pensioners will be better off, some could be worse of by as much as $9,000 per annum.