Investors considering alternative investments, says IOOF

IOOF believes Australian investors will consider alternative investment structures to help meet retirement needs, following changes to the non-concessional contribution cap as part of this year's federal budget.

According to a statement, the changes took effect from 3 May and will capture all non-concessional contributions made to super after 1 July 2007.

IOOF national sales manager of investments Danny Dalton said the ability for Australians to make non-concessional contributions has been severely reduced.

"This proposal is ... hampering the opportunity for many Australians to make additional tax-effective contributions to support their retirement," he said.


IOOF investment specialist Sue Herrald suggested that investment bonds are one alternative structure that can result in a more tax-effective outcome than direct investment

"Investment bonds can offer investors a capped tax rate of 30 per cent on earnings, which are taxed within the bond," Ms Herrald said.

"By having earning taxed internally, there are no complications with investors' personal tax returns."

She added that another benefit of an investment bond is the possibility of establishing a regular withdrawal plan.

"This would allow someone to make after-tax contributions above the $500,000 limit as well as receive a regular income stream from a tax environment capped at 30 per cent, complementing their super capital," Ms Herrald said.

Investors considering alternative investments, says IOOF
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Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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