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Education and Investment
Proposed Super Changes and Wealth Transfer
Proposed changes to Super may directly impact a small percentage of retirees, but indirectly affect many more. At the very least, they could be used as a gateway to a conversation on wealth transfer and tax-effective, targeted investment alternatives.
From Baby Boomers to Gen Alpha… and beyond
The proposed Super changes to the tax treatment of future earnings on balances over $3 million will particularly impact Baby Boomers. But, when you consider the ever-growing issue of wealth transfer, they may travel down the line to Generation Alpha and beyond.
The proposed Super changes
Earlier this year, the Australian Government announced from 1 July 2025 a 30% concessional tax rate will be applied to Super balances above $3 million. This will directly affect around 80,000 people, but significant media reporting has been heard by many more.
The opportunity for Australian financial advisers
Super changes are often politically polarising, and this creates discussion. A common question arises: if this rule is being changed, what’s next? We know many people turn to financial advisers for Superannuation advice, including guidance on questions like this.
There’s no magic answer, of course, but it’s an opportunity to get into planning for eventualities, as well as related financial concerns such as saving for education. A topic high up on the list might be the forthcoming great wealth transfer.
Wealth transfer facts and figures
Over the next 20 years in Australia, $3.5 trillion of the older generations’ wealth will either be spent or passed down. By the end of that period, the youngest benefactors will be in their 80s, and 70% of that amount could have been transferred to children or grandchildren1.
Baby Boomers will pass on $224 billion per year by 2050. If we average that out, we’re looking at $326,000 per household, and $206 million per Australian financial adviser. Of course, all is not equal, but there’s no denying the huge hike in opportunity.
A two-pronged conversation
Changes to Super lead organically into a conversation about the intergenerational transfer of wealth. From there, the discussion could turn to avenues available to clients and their families to make the most out of passing down and inheriting money.
Super, by its very design, will no doubt form a big part of that strategy. But, especially if a client’s initial concern stemmed from the stability of rules and benefits around super, it’s worth discussing complimentary investment products.
As a bonus, advisers who help Baby Boomers navigate the intergenerational transfer of wealth could gain new long-term clients: their children and grandchildren.
Alternative investment products
Education Bonds can be overlooked when it comes to investment options. But their favourable tax treatment, among other benefits, make them prime candidates for the wealth transfer investment strategy discussion.
An Education Bond, with its unique tax benefits, could be a smart complimentary strategy to help your clients transfer wealth the way they want to.
Wealth transfer benefits of Education Bonds
Along with being tax-effective, Education Bonds offer secure and confidential arrangements for the transfer of wealth. The Bonds’ ‘will-like’ estate planning features enable tax-effective distribution to Bond Estate Nominees without the cost, complication and potential legal challenges of wills and estates.
How Futurity can help
Futurity Education Bonds offer:
- Withdrawals at any time for any purpose, without waiting for preservation age.
- Adding a Bond Guardian to carry out future plans.
- Adding or removing multiple beneﬁciaries at anytime.
Our Education Bonds allow for the set-up of education provisioning and wealth transfers to anyone without paying tax, including an auto-transfer feature pre or post-death.
Our Bond Guardian feature ensures wishes are carried out in the event of death and physical incapacity.
A smart and flexible alternative
Given the flexibility and unique tax benefits Education Bonds deliver, they can provide a complimentary strategy to Super. So, whatever your client base, a Futurity Education Bond could be a smart and flexible alternative investment vehicle.
To find out more about how a Futurity Education Bond could help your clients, please contact our National Business Development Team.
1 McCrindle Wealth Transfer Report, 2017