Lifeplan FUM hits $2 billion – inflows boosted by superannuation uncertainty and technology upgrades

Matt Walsh

Matt Walsh

The popularity of investment bonds has surged since the start of the year, with Australian Unity’s investment bond business, Lifeplan, passing through the $2 billion in funds under management (FUM), advice and administration mark.

“The on-going uncertainty surrounding superannuation, particularly since the May Federal Budget, has contributed to a boost in the popularity of investment bonds and they are increasingly seen as a tax effective superannuation alternative,” said Mr. Matt Walsh, General Manager Life and Super for Australian Unity, and head of Australian Unity’s investment bond business, Lifeplan.

“Along with the implementation of major technology upgrades, including multiplatform functionality, a new direct investor portal and website, and XPlan and adviser portal upgrades, Lifeplan has also implemented a number of product enhancements. This includes an expanded investment menu which includes eight new options, based on adviser feedback, which has proven popular.”

Mr Walsh added that the relevance of investment bonds has become more obvious to financial planners and investors who are suspicious of the constant tinkering of the superannuation system and who are looking for a tax effective compliment to their existing super products.”

“Investors are realising that investment bonds are similar to superannuation funds in that earnings are internally taxed within the fund – in this case 30 percent – and also that theyoffer the same asset class diversification as managed funds, but with the added benefit of a tax advantaged structure that managed funds can’t match.

“Investment bond earnings are tax paid at a maximum of 30 percent, and investors do not have any tax liability while their money remains invested in the investment bond.”

“When held for 10 years or more withdrawals from the investment bond are tax free and taxable withdrawals before the tenth year carry a 30 percent tax rebate.”

“As is the case with managed funds, investments held within an investment bond receive full franking credits, which are reflected in the effective rate of tax paid by the investment bond – and thus in the unit price – rather than being redistributed.”

Mr Walsh said investment bonds are more relevant today than perhaps in any other time since their development.

“Investors have been drawn to investment bonds as they have the additional advantage over superannuation. Unlike superannuation, contributions are not capped within the investment bond structure, which creates opportunity when considering long-term savings goals, and they do not carry restrictions on withdrawals nor any concept such as preservation age.

“For investors looking for a tax effective, long term investment option, with investment in a wide range of asset classes available, without the worries of legislative change or limitations of future access to funds, investment bonds fit the bill.”

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