The changes to the means testing of lifetime income streams from 1 July, 2019 presents a significant opportunity for retirement advice. The means testing changes provide an immediate exemption under the assets test where the lifetime income stream meets a capital access schedule. This means an asset-tested retiree can immediately increase their Age Pension entitlement by investing in a lifetime income stream. In this article we look at the retirement advice opportunity and the immediate benefits for asset-tested retirees.

Many self-managed superannuation funds (SMSFs) hold unlisted assets, particularly unlisted trusts and companies which may include any loans the SMSF has made to them. 

These assets are likely to invite more scrutiny from auditors and the regulator, and don’t be surprised if your client’s SMSF is required to provide further information to them.

At the start of each new financial year self-managed superannuation fund (SMSF) trustees will re-calculate the minimum pension payment requirements for each income stream. Members may desire an amount higher than the minimum pension and so it is important to consider how and when to make payments from the SMSF to ensure the minimum pension standards are met, transfer balance account reporting (TBAR) requirements are met, and tax efficiencies are considered.

MEETING THE MINIMUM PENSION STANDARDS

One of the aims of bankruptcy law is to provide a ‘fresh start’ for the person after being discharged from bankruptcy. The concept of a fresh start is embodied in laws which release the person from the future liability to pay existing debts upon discharge. Consequently, the individual can start afresh in rebuilding financial security.

The legislative trend since 2007 towards lower super contribution caps means financial services professionals must be even more vigilant about maximising their clients’ super contribution opportunities. Although several Federal governments have attempted to simplify the superannuation system, the contribution rules remain complicated, and may become even more so in future years.

CONCESSIONAL CONTRIBUTIONS

The term ‘alternatives’ is used in many ways, and for many different asset classes, strategies and investments. So, it is unsurprising that some investors and advisers are unsure what alternatives are, their potential benefits, availability, and how to use them in portfolio construction.

ALTERNATIVE ASSETS V ALTERNATIVE STRATEGIES 

Broadly speaking, alternatives come in two forms - alternative assets and alternative strategies. 

Two options are available when paying a lump sum superannuation death benefit to a SIS dependant who is a non-tax dependant, such as an adult child. The sum death benefit can be paid directly from the deceased member’s super fund to the beneficiary, or it can be paid to the deceased’s estate and then distributed to the beneficiary.

In both cases, the tax-free component can be received tax-free while the taxable taxed element is subject to a maximum 15 per cent tax and the taxable untaxed element to a maximum 30 per cent tax.

Is expanded Pension Loan Scheme (the Scheme) a viable alternative for retirees who are asset rich but cash poor? Extra cash flow can be useful whether it’s to pay for health care or simply to facilitate a better lifestyle.