New retirement income approach needed in 2017

pension/retirement-income/Australian-retirement/Australian-finance/

30 November 2016
| By Oksana Patron |
image
image
expand image

Australian retirees will need to rethink their retirement income approach if they wish to maintain their standards of living in 2017 due to the looming changes to superannuation rules, passed recently by the Government, which would see Australians working longer to maintain the same standard, according to a study by fund manager and pensions specialist.

Plato Investment Management said under the new rules, up to 300,000 part-pensioners were likely to be worse off following the 1 January, 2017 asset test changes and that retirees would need to generate 7.8 per cent to avoid going backwards.

Under the asset test changes, for example, a home-owning couple would lose access to a partial Age Pension if they held over $816,000 in assets which would translate into a reduction of $350,000 from the current rules.

According to Plato Investment Management, the reason for that was the doubling of the taper rate, which would see the current $1.50 per fortnight for every $1,000 in assets above the full pension assets test to double to $3 per fortnight under the new rules.

According to Plato Investment Management's managing director, Don Hamson, part-pensioners would need to review their investment portfolio prior to 1 January, 2017.

"Pensioners wanting to maintain their income may need to consider the return potential of the Australian and global equities markets, and use investment strategies that prioritise income, as well as tap-into their status as ‘tax-free' investors, harnessing the benefits of franking credits to deliver stronger returns," he said.

"In our low-return world, we believe most assets classes will likely struggle to deliver 7.8 per cent p.a [per annum] in returns, especially the conservative asset classes such as cash and fixed income favoured by many in the pension phase."

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks 1 day ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 6 days ago

TOP PERFORMING FUNDS