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SMSFs warned against large allocations to income products

Miranda Brownlee
29 November 2016 — 1 minute read

One financial services firm has cautioned trustees against locking away large chunks of money into income stream products, with the low interest rates currently causing lower returns with these products.

HLB Mann Judd partner of wealth management Jonathan Philpot said that while income stream products such as lifetime annuities are an investment option for SMSF trustees looking for a steady income, they should avoid locking away a large proportion of their fund in these products.

“It’s a low type return that you’re locking in so you’ve got to be careful not to lock in too much. You’re probably not getting much return at the moment, about 4.5 per cent if you’re lucky,” said Mr Philpott.


‘It’s about having a balance so a small portion of money in these products is fine.”

HLB Mann Judd partner of wealth management and superannuation Michael Hutton said that SMSF trustees often think when interest rates are low it’s the best time to invest in a lifetime annuity.

“However when interest rates are low, that’s also when get the lowest actuarially calculated return for annuities as well,” said Mr Hutton.

“So it’s actually better to take out lifetime annuities when interest rates are really high.”

Miranda Brownlee

Miranda Brownlee

Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.

Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.

You can email Miranda on: [email protected]momentummedia.com.au
SMSFs warned against large allocations to income products
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