POWERED BY MOMENTUM MEDIA
Planner warns on franking credits policy fallout
The Federal Opposition’s proposed changes to the franking credits regime risks placing greater pressure on the Age Pension as retirees take on greater investment risk to achieve higher income and face the prospect of capital loss, according to South Australian financial advice principal, Mark Draper.
In a submission to the House of Representatives Standing Committee on Economics inquiry into the proposed ALP move, Draper said the reality of the proposal was that it would most severely adversely impact “middle class” retirees.
“The reality is that the high-income earners and high net worth individuals are unlikely to be materially impacted by this proposal,” he said. “Those who will pay the largest proportional price seem to be mainly ‘middle class’ retirees, while those at the higher and lower end are likely to be unaffected.”
Draper argued that the proposal was highly likely to encourage retirees to spend their capital and become more dependent upon the welfare system and that, overall, the proposal provided a significant disincentive to save for the majority of Australians.
“This proposal changes the goal posts retrospectively to middle class retirees who do not have the option to build further capital to compensate for such material changes to their income,” his submission said.
“Retirees in our client base, already dealing with the changes to Asset Test for Age Pension effective 1st January 2017, are extremely anxious about further changes to their retirement income which materially impact their level of disposable income.”
“This is taking place at a time of record low interest rates and low prospective rates of return in financial markets,” Draper’s submission said.
Recommended for you
Speaking to Super Review, the $70 billion fund has unveiled its new solution to address the ‘cognitive load’ of retirement as members enter their golden years.
New research has suggested it’s time to reconsider the home as a fourth pillar of the retirement income system, alongside the age pension, superannuation, and voluntary private savings.
New research has revealed over 60 per cent of retirees believe their super fund offers retirement income products suitable to support their retirement lifestyle.
Some retirees are “needlessly” paying two sets of fees and often more tax than they need to, according to the industry body.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Ausbil Active Dividend Income Dis AUD
134.89 3 y p.a(%)
2
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
32.74 3 y p.a(%)
3
Spire Oaktree Opportunities XI Second Close
32.68 3 y p.a(%)
4
Spire Oaktree Opportunities XI First Close USD
31.36 3 y p.a(%)
5
Global X GlobalX FANG+ ETF
30.80 3 y p.a(%)
