A superannuation expert has predicted financial planning strategies and conversations will take a different bent in light of the proposed $1.6 million transfer balance cap announced in this year’s federal budget.
Challenger retirement incomes chairman Jeremy Cooper told a recent Spring Financial Group briefing there were now three distinct wealth buckets applying to individuals – one for funds from employment taxed at marginal rates, one for the accumulation phase of superannuation taxed at 15 per cent, and one for the retirement phase of superannuation that was tax free, and new advice conversations would materialise as a result.
“This picture enables us to have a bit of a talk about a new form of advice if you like for people who are either affected by the $1.6 million cap, or think they’re going to be, and it’s not so much [about] the asset allocation world but the asset location world,” Cooper said.
“So in other words, what sort of assets should I have in a tax-free environment and what sort of assets should I have in the 15 per cent [tax] environment.
“I think there will be lots and lots and lots of conversations with advisers about this and a lot of strategies around what’s the best thing to do.”
He used the notion of the most appropriate place to hold equities as an example, whether it be the accumulation phase or pension phase in a superannuation fund in order to make the best use out of items such as franking credits.
“We’ve got two worlds now and we’ve got a choice of where those assets can be best optimised,” he said.
