Is the Pension Cap choking retirement incomes?

The Government’s Budget changes are continuing to impact retirement income flows, with the latest data released by specialist research house Dexx&r revealing retirement incomes cash flows as declining by 2.3 per cent in the year to December.

The Dexx&r data, looking at total retail and wholesale funds under management and administration (FUM/A), pointed to increased flows across all segments except retirement incomes which the company had been impacted by the Government’s $1.6 million pension cap.

Among the five largest retail and wholesale managers, Macquarie led the way with a 14.9 per cent increase to $113.1 billion, NAB with 12 per cent, the Commonwealth Bank 7.9 per cent, Westpac with 7.1 per cent and AMP with 5.5 per cent.

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Looking at the retirement incomes data, the Dexx&r analysis said that during the December quarter net cash flows were negative $4.9 billion which represented a significant increase on the negative $3.5 billion recorded in the September 2017 quarter.

“This net cash outflow highlights the impact of the $1.6 million lifetime cap which took effect in July, 2017,” the analysis said.

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