Two-tier approach to longevity for SMSFs
Self-managed superannuation fund (SMSF) trustees can help meet the challenges posed by longevity by structuring their funds and investments such that a portion of their money becomes available after about age 80.
That was the bottom line of a session delivered to the SMSF Professionals’ Association of Australia conference by Heffron Consulting principal Meg Heffron and ipac South Australia executive director Peter Crump.
While people such as former Prime Minister, Paul Keating have advocated quarantining a portion of superannuation guarantee contributions to deal with retirement incomes after about age 80, Heffron and Crump are advocating a similar outcome be achieved by separating superannuation balances into two streams - one a conventional stream to be used in the early years of retirement and another to be used in the latter years.
Crump and Heffron suggested the formula was workable even under current tax settings, but cautioned that a number of decisions would need to be made, including whether the latter pension was effectively quarantined.
Crump said that while annuities were proving a popular option, they were not the preferred product for many SMSF trustees, particularly those who understood the implications of dying early.
Recommended for you
Treasurer Jim Chalmers has handed down his third budget, outlining the government’s macroeconomic forecasts and changes to superannuation.
Online investment adviser and fund manager Stockspot has introduced Stockspot Super, Australia’s first 'ETF only' superannuation product. superannuation product.
ASIC has called on superannuation funds to improve their oversight of advice fee deductions following an investigation of 10 trustees that found $990 million was charged in one year.
With just 30 per cent of Australians knowing their superannuation balance to the nearest $1,000, Findex has emphasised the role of financial advice in addressing the critical super knowledge gap.