IT’S back to the future for retirement incomes as the latest Budget changes allow retirees to once again legally hide assets from the age pension assets test.

The family home remains the only thing fully exempt from retirees’ Centrelink’s assets test, but after July 2019 new lifetime income stream products — commonly called annuities — will only be assessed at 60 per cent of their purchase price for at least five years or until the owner reaches age 84. After that, only 30 per cent will count.

It replaces the current complex system and has echoes of the past, when before 2007 people could by assets test exempt income streams that did not count towards Centrelink tests.

However, many retirees avoid lifetime annuities, which can pay an agreed amount of income until they die. That’s because it’s a game of chance with their life expectancy and if they die earlier than expected, the money they paid to be locked away may remain with the product provider rather than go to their family.

The Government is also backing new products known as deferred lifetime income streams, where payments don’t start until a pre-agreed age such as 80 or 85.

William Buck wealth advisory director Adrian Frinsdorf said the changes had the potential to help people qualify for age pension payments when their assets previously prevented this. Income from the lifetime products will also be assessed at just 60 per cent.

“For the customer, it’s really interesting,” Mr Frinsdorf said, but added it could be complex.

“The government is pushing clients towards income streams.”

Income stream provider Challenger’s spokesman, Paul Marriage, said the changes simplified a complex system where means testing was based on several factors.

“The government is recognising that it needs to encourage the take-up of longevity products,” he said.

“We have a big wave of people moving into retirement — approximately 700 Australians every day are turning 65.”

Mr Marriage said all annuities had much more flexibility than they did in the past. He said retirees seeking some income certainty typically put 25 per cent of their money into an annuity and left the rest in account based pensions where they could withdraw it at will.

The Government will also require all super funds to offer comprehensive retirement income products to their members — not just account-based pensions that run out of money when the member exhausts their nest egg.

The Actuaries Institute said these new products would “provide individuals income for life, no matter how long they live”.

Mr Frinsdorf said the impact of this change could be enormous for many funds, who did not provide these products and would have to outsource. “Challenger would be licking their lips,” he said.