Financial plans turned on its head?
Uncertainty seems to be the buzzword in financial planning at present, with planners wondering if they will have to alter their clients' financial plans in light of Federal Budget changes to superannuation, the Financial Planning Association (FPA) said.
Professional standards and advocacy manager, Benjamin Marshan, said many advisers were asking the association whether there was a view that these proposals would be legislated, and what the specific details would entail.
Planners' concerns around their client's financial plans were growing after the Government announced the annual after-tax super contributions limits would be replaced by a lifetime limit of $500,000, and the limits on the amount of money that could be transferred into a tax-free private pension would be $1.6 million.
"Suddenly, they have to change that and there are additional costs, there's additional stress, there's additional anxiety around having a plan in place potentially for a number of years which is now being turned on its head because of some of these proposed changes," Marshan said.
Pre-retiree clients who planned to potentially sell their assets and funnel that windfall into their super in the lead up to their retirement would bear the brunt of the new caps and the amount they could salary sacrifice.
"It will mean a lot of the plans they have in place may have to change and potentially the retirement date they had in mind may have to change depending on what the timeframes for getting money into super is," Marshan said.
Planners, and the FPA itself, also continued to be uncertain around the specifics of the professional educational requirements despite the association receiving positive feedback from its members on the government's extension of the timeframe to fulfil the requirements.
"Our message is that we don't know because the [industry-funded] independent body will make that decision once it's set up and it's certainly not set up," Marshan said.
However, Marshan observed that many planners who were close to retirement were starting to think about pursuing further education after the Government granted planners extensions to attain qualifications.
"A lot of them are starting to reconsider whether or not they actually leave the industry and do the transition," he said.
AUTHOR
Malavika Santhebennur
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