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SMSFs primed for best financial interests duty

Self-managed superannuation funds are ahead of the game in terms of meeting the looming best financial interest rules, according to its peak body.

SMSF Association deputy chief and director of policy and education Peter Burgess told the association's first day of its National Conference this morning that the reform is something the SMSF sector should have no concern about.

"SMSFs have always been held to a very high standard when it comes to the sole purpose test, and transactions and decisions that could result in members deriving a personal benefit from the use of fund assets have always been heavily regulated and scrutinised," he said.

The new best financial interest duty is part of the government's Your Future, Your Super draft legislation package, which is causing contention across the industry.

The best financial interest rules aim to make trustees more accountable about decisions they make around day-to-day operational fund expenditure, investing members' money, strategic decisions and discretionary spending.

"Given that members of an SMSF are also the trustees there is a strong incentive already for trustees to act in their own financial best interest," Burgess said.

The Minister for Superannuation, Financial Services and the Digital Economy Jane Hume briefly addressed the conference, saying that SMSFs are an integral part of the superannuation industry, and that the government is keen to support the sector where it can.

"As at September last year, there are more than 591,000 self-managed super funds accounting for $728 billion or around a quarter of funds under management," she said.

"As [the SMSFA's] research shows, the driving force behind these numbers is Australians' desire to be 'masters of their own destiny' to control their own personal retirement incomes. That's something we as a government wholeheartedly endorse. We want more people to take an active interest in their personal finances and retirement savings."

Hume flagged that the government will progress important reforms, such as the Retirement Income Covenant, that were put on the backburner when COVID-19 hit.

It will work with the SMFSA soon to improve the retirement needs and strategies of members, she said, adding that superannuation providers should not have to wait for the government's direction and take action in providing such means now.

"It's imperative that trustees of all funds support their beneficiaries by developing strategies that carefully consider the retirement income needs and preferences of different cohorts of their members.

That is what the covenant is about. Having a strategy for retirement is as applicable to self-managed super fund members as it is to members of large funds," she said.

Read more: AustraliansDigital Economy Jane HumeFinancial ServicesFutureMinister for SuperannuationNational ConferencePeter BurgessRetirement Income CovenantSMSFASMSF Association
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