Defined benefits enquiries rise
Clarity around defined benefit pensions was the fastest growing enquiry area from advisers during the December quarter, according to BT Financial Group.
BT's advice technical team found there was a growing interest in how defined benefits would be treated and how it would interact with the $1.6 million cap.
BT technical consultant, Tim Howard, said: "The good news is that there is a simple way to determine this and it's actually pretty straight forward".
"You calculate the total balance of a defined benefit pension for the purpose of the $1.6 million transfer balance cap by multiplying the annual income stream by 16, if it's a lifetime pension, or by its remaining term if it's a fixed term pension," he said.
Howard said following defined benefit pensions, the $1.6 million figured continued to be a regular enquiry from both advisers and clients.
"There is a bit of confusion around what the figure means, and there is a misconception that this refers to a limit around how much you can save in superannuation, but that's not the case," he said.
"The $1.6 million represents the figure in retirement phase, after which any excess needs to be moved back to the accumulation phase, where it will be subject to 15 per cent tax on earnings, or removed from superannuation."
Recommended for you
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
In the run-up to heavy losses expected at the end of the financial year, June has already reported consecutive weeks of adviser losses.
ASIC has banned a former NSW adviser from providing advice for 10 years for investing at least $14.8 million into a cryptocurrency-based scam.
ASIC has sent warning notices to social media finfluencers who it suspects are providing unlicensed financial advice to Australians as part of a global crackdown by international regulators.
