Sherry concerned over SMSF trustees lack of knowledge and responsibility

In his speech to the SMSF Professional Associations of Australia conference in Brisbane, Senator Sherry said he supports the ongoing role of SMSF sector in the superannuation industry but expressed his concern over troubling figures revealed by a recent ATO survey.

The survey found that 21 per cent of participating SMSF trustees had a ‘low to medium’ or ‘low’ knowledge of their obligations. Over 30 per cent of new trustees didn’t know what the ‘sole purpose test’ was, 15 per cent of them didn’t have an investment strategy while another 25 per cent were unaware of the restrictions on the type of assets that could be acquired from related parties.

Minister Sherry also raised the point that despite ATO data showing a staggering 10.51% for ratio of operating expenses to total assets for fund sizes up to $50,000, a growing number of people are being advised to set up SMSFs without being comprehensively advised of the time and costs involved in running their own super fund. This figure dropped to about 2.26% for funds with assets between $200,000 and $500,000 meaning that funds with low asset values may not have investment portfolios diversified enough to overcome the costs and risks involved in running a SMSF – a factor clearly people with relatively low fund assets would need to take into account.