SMSFs fail to keep up with pace of change
Many self-managed superannuation fund (SMSF) trustees are failing to keep their documentation up-to-date and risk running into regulatory and compliance problems.
According to data collected by Cleardocs, a specialist documentation provider to accountants and the SMSF sector, up to 45 per cent of people who have established a self-managed fund have failed to update their documents to ensure they are consistent with legislative and regulatory changes.
The most significant changes to occur to the SMSF environment were contained in the former Howard Government’s Simpler Super and Better Super changes that occurred in 2007, but according to Cleardocs managing director Christopher Balmford, 44.2 per cent of people who ordered documents for themselves (rather than using an adviser) have a SMSF with a deed that was established before 2007.
As well, he said that 47.9 per cent of Cleardoc’s professional adviser customers have clients whose SMSF had deeds from before 2007, including 16 per cent whose deeds dated back to before 2005.
Balmford said that while he was not claiming that his company’s data was an authoritative indicator of the SMSF sector, it nonetheless indicated the existence of a problem that needed to be addressed.
He said that while it was possible that SMSF trustees had used providers other than Cleardocs to renew their SMSF deeds, his company nonetheless held 16 per cent of the market for new SMSF set-ups, and 7 per cent of the market for existing SMSFs.
Balmford said he believed it was significant that people ordering SMSF documents for themselves were more likely to have been vigilant about keeping them up-to-date than was the case for those using advisers.
He said given the changes that had occurred to the regulatory environment, it was possible that SMSF trustees utilising dated documentation could find themselves establishing pension arrangements that were non-compliant.
Balmford said the end of the financial year usually gave rise to a spike in the number of trustees renewing their SMSF documentation and the picture with respect to ageing documentation might change.
AUTHOR
Mike Taylor
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