Advisers may need to revise their clients’ pension strategies in the wake of the changes to the assessable income rules handed down in last week’s federal budget, an industry expert has said.
The action would potentially be needed in response to eligibility around the Commonwealth Seniors Health Card regarding assessable income.
“A lot of people may lose that because from 1 January 2015 superannuation income is to be included in the definition [of assessable income],” Strategy Steps director Louise Biti told selfmanagedsuper.
“I have no idea how they are going to administer and track that one.”
Biti pointed out, however, that there were grandfathering provisions associated with the change that could prompt an adjustment to current pension strategies before the proposed implementation date.
“In that measure there is grandfathering whereby anybody who has an account-based income stream in place before 1 January 2015 will not be affected by that change,” she said.
“As a result there may be a rush for people to potentially start their account-based pension before 1 January.”
In addition to protecting client eligibility for the Commonwealth Seniors Health Card, she suggested advisers might need to establish an account-based pension for them prior to 1 January 2015 to maintain their ability to access Centrelink benefits and to prevent deeming provisions from coming into play.
