The Australian Securities and Investments Commission’s (ASIC) plan to scrutinise self-managed super funds (SMSF) with starting balances below $200,000 has been criticised by a law firm, claiming the regulator has been misinformed.
Townsends Business and Corporate Lawyers have hit back at ASIC’s view that SMSFs with a starting balance of $200,000 or below is unlikely to be in the client’s best interests, is completely incorrect, arbitrary, and deeply ill-informed.
The law firm said certainty was an issue regarding what happens to super when a client dies. Publicly offered funds may not allow the ability to make a specific type of binding death benefit nominations (BDBN), and/or ensure their death benefit does not become subject to a public offer trustee’s payment policy.
Investment strategy is also another reason the firm found ASIC’s comments to be incorrect as some strategies public funds do not offer that “can give a massive boost to long term retirement income such as LRBAs [limited recourse borrowing arrangements] to buy direct shares and property.”
The firm said estate planning was another reason for having a SMSF irrespective of balance.
“You can do a non-lapsing BDBN or a SMSF Will or impose specific conditions to reflect a blended family situation,” Townsends said.
“[Another reason is] choice of life insurer — only via a SMSF can you decide which life insurer you want to use and pay via tax deductible super contributions.”
Other reasons Townsends found that made ASIC’s comments arbitrary were the lack of long-term focus, not taking advantage of certain strategies in the client’s best interest, and lack of control.
