Indexation key issue for female clients

TBC indexation female

The pending indexation of the transfer balance cap and exiting an SMSF are two key areas female clients are seeking information about currently.

The indexation of the general transfer balance cap (TBC) and how to exit an SMSF after a relationship breakdown are two key issues female clients are seeking more information about from their adviser, according to BT.

BT technical and regulatory senior manager Sarah Conte said more women were becoming engaged in their finances so they could be financially independent and many were looking to use the services of a financial adviser.

“We expect more women to take greater control of their finances in the future. However, overall, women typically have lower superannuation balances compared to men. Yet women are living longer, so making the most of advice opportunities is even more important,” Conte said.

BT found, based on questions asked of its technical services team, the leading topic for financial advisers with high net worth female clients was the double indexation of the TBC to $1.9 million and the increase of the total superannuation balance (TSB) threshold also to $1.9 million on 1 July.

“Advisers with high net worth clients are asking BT about how the new thresholds apply to their clients’ circumstances so they can achieve the best outcome for their clients,” Conte said.

BT noted advice clients who were yet to receive a retirement income stream and plan to start one this year may be better off delaying the commencement of the income stream until after 1 July so they can gain the maximum indexation benefit.

“However, double indexation may not be relevant for people who have a super balance below $1 million and female clients, especially younger ones, are more likely to be in the mass affluent segment, not high net worth,” Conte added.

The other key issues related to exiting an SMSF after the breakdown of a relationship are whether the female client should remain in the fund and what happens if it is wound up.

“Winding up an SMSF can be a minefield and it’s no surprise that financial advisers are asking questions about the technical ins and outs,” Conte said.

“There are some nuances within the rules when dealing with relationship breakdowns and splitting superannuation and it’s a good idea to seek guidance from an expert.

“Unfortunately, the financial impact of divorce and relationship breakdowns can be very significant for women. And while it’s encouraging to see so many women wanting to take control of their finances and establish SMSFs, these considerations should be made earlier rather than later, especially if the SMSF members are couples.”

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