Time is running out
Mike Goodall
With less than a month to go until the 50 per cent assets test exemption for complying income streams becomes a thing of the past, ANZ Financial Planning is encouraging planners to reconsider their clients’ suitability for the products before it’s too late.
According to the dealer group’s general manager, Mike Goodall, planners should be reviewing their client lists to determine who could benefit from considering a complying annuity before the September 20, 2007, cut-off date.
“As it is at the moment, up until September 20 only half of the money a client holds in an annuity like this is counted towards the assets test for social security payments,” Goodall explained.
“After September 20, Centrelink will assess all of the client’s assets, excluding the home, at an undiscounted rate to determine the level of pension payments. If you put the money aside [in a complying annuity], only half at the moment will affect your potential pension from the Government.”
However, Goodall warned that while complying annuities delivered a regular income, they also locked in capital, meaning they wouldn’t be suitable for every client.
“That’s why we are saying to people if the opportunity is there to do something before September 20, it’s worthwhile at least having a look at it,” he said.
“One of the things most financial planners will tell you is that people will go to quite extraordinary lengths to get their health card and their transport card and at least some sort of a pension.
“For a lot of the baby boomers who are retiring, they were brought up under the belief that every working Australian is entitled to a pension.
“If people have thought that way even a little bit, the opportunity seriously will close from September 20.”
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
