Centuria Capital general manager Neil Rogan says super changes risking Australians’ retirement plans may cause investors to seek out alternatives.
“I think the proposed changes to concessional and non-concessional caps have interrupted the plans of many Australians, and as part of that process they will be looking to identify tax-effective structures to invest their money,” Mr Rogan said.
“They may look for a company structure, a discretionary trust or if they’re looking for simplicity and flexibility, they may even look to an investment bond.”
Mr Rogan urged investors to assess their own situation when exploring options available to them.
“Investors who are currently 100 per cent in an SMSF may want to have all three to maximise various opportunities around tax effective investing,” he said.
Investment bonds, for example, have a similar taxation cap structure to superannuation while lacking initial contribution limits.
“With an investment bond, the fund’s tax paid is capped at 30 per cent for ongoing earnings... a bit like the super structure paid at 15 per cent,” Mr Rogan said.
“Investment bonds can be a good alternative for those who feel locked out by a superannuation concessional cap given there is no limit to the initial year contribution investors can make. In the second year, they can then invest up to 125 per cent of the first year’s contribution.”
If the proposed changes are implemented, the onus will be on Australians to have a backup plan.
“Trustees should be aware of these different options so that once specific changes come in, then they can execute on those options,” Mr Rogan said.