Many SMSF members, especially those in pension phase, are necessarily focused on income generation. Income is also an especially important issue in this era of record low interest rates. But the local fixed interest market has been constrained due to a strict regulatory regime and the generally less sophisticated nature of the market – until now.
With this in mind, the panel session Income products in retirement, moderated by Peter Hogan, head of technical, SMSFA, was an opportunity for experts to look at the options in this asset class for SMSFs.
Darren Kennedy, manager, retirement income policy division, federal Treasury, set the scene at the top of the session. He covered broad policy constraints around constructing income streams from a tax and retirement policy point of view.
David Knox, senior partner, Mercer, commented on the technical issues around constructing income streams and explored roadblocks that have recently been removed.
Craig Meldrum, head of technical services and strategic advice, Australian Unity Personal Financial Services, looked at what new income stream products mean for the market generally, and for people planning for retirement.
There have been significant developments in the way tax laws treat underlying assets supporting a retirement income stream. In last year’s budget, the federal government announced four legislative changes to allow for more innovative retirement products. These were explored during this session.
Retirement products require underlying investments to generate income. Thanks to new rules, there has been a shift in the way the pool of assets that underpins investment products providing an income stream can be built. Discussion also focused on how the Australian fixed income market may need to change to accommodate retirees’ income needs.
