Retirees to access income stream capital
Retiree clients of financial planners will be able to tap into the capital base of complying income streams when changes to legislation come into effect on Thursday.
The legislation, the Family and Community Services Legislation Act 2001, is part of changes to the Social Security Act and will allow people with a complying income stream to access their capital in emergency situations.
Colonial First Statetechnical services team manager Erica McConnell says the changes will apply to products such as lifetime annuities and lifetimes pensions as well as term certain products.
“These products have not been recommended in some cases by planners because they lock up capital, but the changes now allow retirees to get the funds back in certain events,” McConnell says.
“In the past the funds have not been put in a complying income stream because of a fear of having to use the funds for a rainy day, such as medical treatment, but this offers more flexibility in using complying income streams.”
The new rules will only allow retirees access of the capital in times of hardship to meet with unavoidable expenditure and will not affect the asset tests exempt status of their complying income stream.
Expenses covered by this proviso will include essential medical expenses not covered by health insurance, the cost of replacing or essential repairs to the principal home not covered by insurance and the replacement of essential household goods not covered by insurance.
A number of restrictions have been placed on accessing the capital which will only be allowed on the condition that the retiree has insufficient other assets to meet the expenditure.
Recommended for you
Unveiling its performance for the calendar year 2024, AMP has noted a “careful” investment in bitcoin futures proved beneficial for its superannuation members.
SuperRatings has shared the median estimated return for balanced superannuation funds for the calendar year 2024, finding the year achieved “strong and consistent positive” returns.
The second tranche of DBFO reforms has received strong support from superannuation funds and insurers, with a new class of advisers aimed to support Australians with their retirement planning.
The financial services technology firm has officially launched its digital advice and education solution for superannuation funds and other industry players.
