Confirmation on deferred lifetime annuities
In a move that was flagged ahead of the Budget and will please some sections of the financial services industry, the Government has moved to make deferred lifetime annuities products more attractive.
The Government confirmed it would be encouraging the take‑up of deferred lifetime annuities by providing the products with the same concessional tax treatment that applied to investment earnings on superannuation assets supporting retirement income streams from 1 July, 2014.
It said the change would give retirees more choice by assisting those who wished to ensure financial security in their later years by allocating part of their superannuation to a product that would provide an ongoing income stream beyond a certain age.
It said the measure would have no revenue implications over the forward estimates and represented the progression of a recommendation of the Henry Tax Review.
“A deferred lifetime annuity is an annuity that is purchased for an up‑front premium but where payments do not commence immediately — for example, the product might be purchased at age 60 with payments commencing at age 80 and continuing for life,” the Budget papers said.
“The existing law requires that income streams must make payments at least annually. As a deferred annuity does not meet this requirement, it does not qualify as an income stream, and therefore is not entitled to the associated concessional tax treatment that applies to earnings on superannuation assets supporting income streams.”
Recommended for you
Digital advice tools are on the rise, but licensees will need to ensure they still meet adviser obligations or potentially risk a class action if clients lose money from a rogue algorithm.
Shaw and Partners has merged with Sydney wealth manager Kennedy Partners Wealth, while Ord Minnett has hired a private wealth adviser from Morgan Stanley.
Australian investors are more confident than their APAC peers in reaching their financial goals and are targeting annual gains of more than 10 per cent, according to Fidelity International.
Zenith Investment Partners has lost its head of portfolio solutions Steven Tang after 17 years with the firm, the latest in a series of senior exits from the research house.
