Page 8 - Wealth-Adviser-Issue-125 (FWP)

ISSUE 125
NOVEMBER 2025
Ask a benefit you originally locked in, even if your income later

goes down. Newer, cheaper policies assess your income right
Q&A: Question before you claim, so the benefit can move down depending
on your earnings at that time.
This can matter if your income varies, you’re self-em-
ployed, or your remuneration fluctuates year to year. In
Question 1: some cases, paying more to keep a guaranteed benefit is
My investment bond is now three years old and I want to worthwhile. In others, a lower-cost policy tied to recent
keep its 10-year tax timeframe on track. I’ve heard about income can still meet your needs.
the 125% rule. How does it work, and how do I avoid
resetting the clock? Question 3:
Each year, you are allowed to contribute up to 125% of I’ve heard about new Innovative Retirement Income
what you put in during the previous year without restarting Solutions. How do they compare to a normal account-based
the 10-year period. For example, if you contributed $4,000 pension?
last year, the most you can add this year is $5,000 (which is An account-based pension gives you flexibility and full
125% of $4,000). access to your remaining balance, including whatever is left
If you stay within this limit, your bond continues towards for your beneficiaries. The trade-off is that your income may
its 10-year mark, after which withdrawals may be more rise or fall depending on markets and how long your savings
tax-effective. If you contribute more than the 125% limit, last.
the entire 10-year period restarts from that year. IRIS products work differently. They usually pool risk
Because your bond is already three years old, keeping across many retirees, which means they can pay a signifi-
your contributions under the 125% cap is the key to preserv- cantly higher and more stable income for life. In exchange,
ing your original timeframe. the amount left to your estate may be reduced or, in some
designs, may not be payable at all. The benefit is potentially
Question 2: a stronger, more reliable retirement income and a better
My agreed value income protection premiums have gone up long-term lifestyle.
a lot. Newer policies are far cheaper. Should I move to one of
those? With all these topics, there is no single “right” choice. Your personal situation
The important difference is how the benefit is calculated matters, and you should seek advice from a licensed financial adviser to understand
at claim time. Your current agreed value policy pays the what is most appropriate for you.

Future Wealth Planners

Level 1, 176 Main Street
Osborne Park WA 6017

P.O. Box 16
Osborne Park WA 6917

P: 08 9207 3844
W: www.fwplanners.com.au
E: clientservices@fwplanners.com.au

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