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Pension grandfathering will only benefit some

The grandfathering arrangements under the new age pension rules will not be advantageous to all SMSF members due to the new methods used for the income and assets testing, an industry expert has said.

“There are some clients where grandfathering will be highly relevant and some for whom it isn’t,” Heffron SMSF Solutions head of customer Meg Heffron told the Heffron Advanced SMSF Training day in Perth last week.

“You can probably look at it like this: generally, if you’re a homeowner, the assets test thresholds are so low that probably it’s the asset test that’s really driving whether or not you’ll get an age pension.

“If you’re not a homeowner, then it depends. If you’re single and you’ve got assets of more than $450,000, and a couple with assets of more than $550,000, again the asset test will be the determining factor.

“If you’ve got assets below the $300,000 or $350,000 mark, you’ll probably get the full age pension and it won’t really matter which test applies.

“It’s the people with asset balances for singles between $300,000 and $450,000 and for couples between $350,000 and $550,000 that are in the sweet spot to look at now.”

Financial planners should be focusing on people falling within those asset balance ranges because a strategy taking advantage of the grandfathering provisions could really make a difference to them, Heffron said.

She pointed out that the way the new legislation worked, grandfathering might only be a good thing for a couple of years and financial planners needed to rethink their clients’ super income stream strategy to assess whether grandfathering was still producing the best outcomes.

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