Get in before the changes: SMSF reforms to place ‘small changes’ on trustees currently in funds

As the government released its comprehensive package of reforms for the nation’s superannuation system, one SMSF (self-managed superannuation fund) expert has stressed that trustees with existing funds have no actionable requirements; however, she recommended that individuals wanting to open a fund should do so before the changes come into force.

The proposed reforms announced on 19 August, Protecting Consumers in the Superannuation System, aim to strengthen protections across the system, provide access to financial advice and guidance, and position the Compensation Scheme of Last Resort (CSLR) to provide meaningful protection when needed.

Speaking with Accounting Times, RSM director of business advisory Courtney McKinnon (pictured) agreed that the reform’s requirement for SMSF trustees to satisfy a basic knowledge test is positive as “better informed trustees will make better decisions”.

“Trustees do need to consider their investment strategy in moving forward and what it means for the fund, and as their lives change, will their investments change?” she said.

However, she said that it is crucial that the government provides further clarity on how it will deliver this requirement.

She said that the government should provide further details on who will be running the education requirement and whether it will be available for access on multiple platforms, how the basic knowledge requirements test will work, and the repercussions if the test is not passed.

McKinnon said that the answers to these questions will inform how trustees set up their funds and how long it will take them to do it.

“That's something that will add extra compliance and friction to a fund,” McKinnon said.

Trustees who already have an SMSF are not impacted by any major changes; however, clarity must not stop at the basic knowledge requirements, but also the guardrails, if any, put in place for small balance rollovers and the minimum super balances, and whether this is going to stop genuine rollovers from happening in time, said McKinnon.

“I think [the reforms] will just add some friction points, and it might weed out the ones that don't really need super funds in the first place, or they weren't quite doing it for the right reasons,” she said.

“Nothing's changing majorly. I think it is just small changes that will [hopefully] help things run better… Hopefully this will help the right dedicated trustees have super funds that will set them up for success in their retirement.”