Ross Higgins
The 2016 Budget and whatever the outcome of July’s 2016 Federal Election inevitably points to a major redesign of super concessions aimed at lessening their attraction to higher income and wealthier clients.
The Government and Opposition seem on parallel policy paths to peel back the superannuation system to fit so proffered new policy objectives of super. These objectives draw heavily on last year’s Financial System Inquiry (Murray) Report and at their core have the notion that New Super is for building only a moderate, and not necessarily comfortable, retirement nest-egg.
Personal wealth accumulation vehicles outside super
The tenor of the Budget, now followed up in the Government’s stated election policy is that savings outside of super will be encouraged as the Third Pillar of Australia’s retirement incomes system.
“We believe that Insurance Bonds are the next best, and indeed only alternative tax-effective investment framework to superannuation. Importantly, Insurance Bonds will be at the forefront of the alternatives (or supplements) because they offer:
- Completely uncapped contribution limits for lump sum investments, and without constraints on their growth (whether by income or capital);
- Attractive and progressively increasing contribution caps for ongoing additional contributions under the 125% Rule;
- Unrestricted access at any age and for any purpose; and
- Versatile tools for estate planning and making intergenerational wealth transfers – these can be flexibly structured as Estate and/or “protected” Non-Estate arrangements.
“As well, Insurance Bonds are another approach to ‘life-events’ financial planning,” said Ross Higgins, Managing Director, Austock Life.