Professional Planner Investor – Strategies outside of Super article

5 October 2016

Publication: Professional Planner
Sydney, 5 October 2016
Author: Centuria Capital


Investors urged to consider strategies outside super in light of new rules

“The Government’s draft legislation for super reforms released over the last weeks means that investors face more rules and continuing uncertainty when it comes to their superannuation. If the draft is passed, wealthier investors may need to consider alternatives to supplement their super.”

These are the words of Neil Rogan, General Manager of the Investment Bond Division for Centuria Capital (Centuria), who has today highlighted that high net worth investors may face ongoing uncertainty and may need to consider alternative tax effective investment structures when it comes to their retirement planning.

“The legislation reveals that making additional contributions to super may no longer be the best option for many when planning for their retirement. Wealthy savers in danger of exceeding the $1.6 million tax free pension caps should review their tax effective investment options.”

“The dynamic superannuation environment had led to an increased volume of inquiries for information on investment bonds. Investors who are looking for a simple, flexible way to supplement their super are recognising that investment bonds can be one of the most tax effective options,” explained Mr. Rogan.

Investment bonds are a tax paid investment structure offering investors a range of managed funds of different asset classes and to suit a variety of risk profiles.  Tax is paid at the company rate of 30% within the bond structure.

“One of the key benefits of an investment bond is that there is no limit to the amount that can be invested. For investors facing limits on what they can concessionally and non concessionally contribute to superannuation  from 1st July next year, this is an option well worth considering.

“Another benefit is the flexibility. Investors can access their funds at any time,  but if invested for 10 years, there is no personal tax paid on withdrawals.

“Concessional contributions to super will now be limited to $100,00 per annum – well  above the $25,000 proposed threshold, but still down on the previous limit of $180,000. Those investors who are likely to be impacted by this cap could also consider the flexibility of a bond that allows for additional contributions of up to 125% of the previous year’s contribution can be made each year,” Mr. Rogan said.

“Of course, every investor’s situation is different so it’s important to look carefully and assess the pros and cons of all investment alternatives, including investment bonds.

“But for Australians who will be affected by the new rules, or those who would like to contribute more than the maximum tax-effective contribution each year, investment bonds are a robust option worthy of consideration,” Mr Rogan said.

This media release was issued on 5 October 2016. Issued by Centuria Life Limited (Centuria) (ABN 79 087 649 054, AFSL 230 867). The information in this article is general information only and does not take into account the financial circumstances, needs or objectives of any person. Centuria is the responsible entity of a number of Investment Bond Strategies, each of which are issued under a product disclosure statement (PDS) that is available on Centuria’s website for all Bonds open for investment. An investment in any of Centuria’s Investment Bonds carries risks associated with an investment. The risks relating to an investment are detailed in the each Investment Bonds PDS and Centuria strongly recommends that the PDS be downloaded and read before any investment decision is made.  Centuria receives fees from investments in its Investment Bonds.