Superannuation

However, several innovations have been incorporated into lifetime income streams over the past few years to make them more attractive and provide greater flexibility.

For example, you can have a guaranteed payment period which ensures that in the event you die within a certain time-period after commencement of the income stream, say 20 years, payment will continue to be made to your beneficiaries until the end of that period.

Another popular feature is to nominate a reversionary pensioner. This allows your pension to continue to be paid on your death for the lifetime of the second nominated pensioner, such as a spouse.

Previously, some people may have chosen to commence a more restrictive form of Lifetime Income Streams (known as ‘complying’ income streams), which had certain Centrelink and taxation advantages under previous laws. These are generally no longer available to new investors as the rules and concessions have changed.

Please note: From 1 July 2019, new means test rules have been established for those eligible to receive a government aged pension to encourage the development and take-up of lifetime retirement income products (e.g. certain annuity products) that can help retirees better manage the risk of outliving their savings:

• the income test will assess 60% of all pension income payments received;
• the assets test will assess 60% of the nominal purchase price of the annuity until the person reaches the life expectancy of a 65-year-old male (currently age 84) – or a minimum of five years – and then 30% of the purchase price for the rest of the person’s life.

Grandfathering applies to lifetime income streams purchased before 1 July 2019. This means that these income streams will continue to be assessed under the rules that existed prior to 1 July 2019.