How will Stronger Super affect your super fund?
Stronger Super is part of the Australian Government’s SuperStream review, which was first announced in September 2011. The review aimed to increase the obligations of SMSF trustees in their management of fund assets.
The Stronger Super measures are intended to be implemented gradually over a number of years to improve the operation and efficiency of superannuation funds and the integrity of the industry.
Part of the suite of measures was introduced in August 2012 and required trustees to:
- regularly review the fund’s investment strategy
- consider insurance for members
- value the fund’s assets for financial accounting and statements from 1 July 2012.
An additional change came into effect in January 2013. It requires all super funds maintaining more than one account for an individual to consolidate those funds into one, when possible and practical.
This regulation hopes to prevent fund members paying unnecessary fees and insurance premiums by having multiple accounts. Trustees of SMSFs may see an increase in fund assets as fund members with multiple accounts elsewhere roll these amounts into their SMSF.
At 30 June 2013, trustees will be obliged to prepare a statement reporting the market value of each of the fund’s assets – which is easy enough for cash investments. But for SMSFs that invest in property, art or collectables, obtaining a market value may result in considerable effort and cost.
Anticipating the additional work involved for trustees, the Australian Taxation Office (ATO) has released an information sheet on the reporting obligations of SMSF trustees (see SMSF News – edition 23 at www.ato.gov.au). This information sheet also contains links to a set of guidelines to assist trustees with the valuation process.
A further reform, effective from 1 July 2013, states that all auditors of SMSFs must be registered with the Australian Superannuation and Investments Commission (ASIC). The registration process, overseen by ASIC, includes the de-registration of non-compliant auditors and the development of a competency exam for prospective auditors.
It is expected that the registration period for auditors will begin on 31 January 2013. All auditors must be registered with ASIC by 1 July 2013 to conduct SMSF audits after this date.
Trustees of SMSFs will be responsible for ensuring that auditors engaged to audit their SMSF are registered with ASIC.
A further recommendation made by the Stronger Super reforms is to encourage funds to use updated technology. This will benefit members by:
- reducing errors when recording members’ details (errors can lead to duplicated or lost accounts)
- improving the quality of members’ information
- reducing processing errors and delays.
The government expects that these Stronger Super reforms will lead to two important changes. First, it should improve the integrity of super funds. Second, it should increase investor confidence in the superannuation sector and, as a result, encourage more Australians to plan for their retirement.
For more information, please call us on 02 9318 6400 or email fred.tortora@surrypartners.com.au