Rollovers & Transfers From Large Funds to SMSFs: Details of the New Procedures Released

11 March 2010

The Australian Prudential Regulation Authority has recently released guidelines on the processes which large funds should consider implementing to determine the validity of member requests to transfer and rollover benefits from large funds to SMSFs.

The new guidelines have been released to better manage the risk of illegal early access to super benefits (eg members accessing their benefits before retirement) or theft of super benefits where the thief purports to be the member.

The APRA guidelines are suggestions and not mandatory.  However, large funds will adopt those suggestions and some funds may even impose more stringent requirements.  Further, the guidelines are not intended to prevent rollovers and transfers of benefits to SMSFs or to be used as obstacles against rollovers and transfers.

The 5 Steps of the procedure are:

  1. Conduct proof of identity checks of the person making the request.
  2. Conduct checks on the SMSF.
  3. If the SMSF has been recently registered and has not as yet received a notice of compliance from the ATO (this will be indicated by the fund status as “Registered – status not determined”) – additional checks will be undertaken.
  4. Conduct checks on the transfer/rollover payment.
  5. Conduct such other checks as the paying fund considers appropriate.


Some comments on the Steps

Step 2 requires the paying fund to confirm that the SMSF is listed on the SuperLook Up website (www.abr.business.gov.au).  The name of the SMSF set out in the transfer/rollover request and its ABN must precisely match the name and ABN of the SMSF as shown on SuperLook Up.  A minor variation between the name of the SMSF indicated on the transfer/rollover request and the name of the SMSF on SuperLook Up could be the basis of a refusal to comply with the request.

Much greater attention to detail will be required when registering SMSFs and to ensure that the name appearing on the deed constituting the SMSF and the name provided to the ATO are a precise match.

Step 3 requires the paying fund to take additional steps if the status of the SMSF is reported on SuperLook Up as “Registered – status not determined”.

If the SMSF has had this status for 2 or more years, it is likely that the SMSF is not operating and therefore has not lodged tax returns and the transfer/rollover should be refused.

If there have been 3 or more transfer/rollover requests in respect of the same person – this may warrant the paying fund to refuse the request as such multiple requests are indicative of fraudsters siphoning off an innocent member’s benefit.

If there have been 3 or more transfer/rollover requests which name the same SMSF this may warrant the paying fund to refuse the request as such requests from different members to the same fund is indicative of the SMSF being used for illegal early release.

And to conclude

Illegal early release of benefits and theft of benefits by fraudsters are serious matters and reasonable steps should be implemented to reduce the risk of such activities. 

However, there is the possibility that a minority of large funds may use the new procedures and guidelines as a means of delaying benefit transfers/rollovers or to dissuade SMSF members from transferring/rolling over existing balances to their SMSFs, particularly recently established SMSFs.

In any event, the time taken to effect transfers/rollovers will be increased and the information and documentation demands of paying funds are likely to become more onerous and more tedious and time consuming to satisfy.

Back Enquiry