Sherry urges tighter SMSF governance

A significant minority of self-managed superannuation funds (SMSFs) may not be well managed, according to the Minister for Superannuation and Corporate Law, Nick Sherry.

Sherry told the opening session of the SMSF Professionals’ Association of Australia annual conference in Brisbane today that an Australian Taxation Office survey had found that 21 per cent of participating SMSF trustees had low or low to medium knowledge of their obligations.

Furthermore, he said that 30 per cent of those surveyed did not know what the sole purpose test was.

“The survey results indicate that whilst the majority of the sector is well managed, a significant minority may not be,” Sherry said.

The minister said that it was in these circumstances that the SMSF regime required a robust governance system.

Sherry also expressed concern that a growing number of people were being advised to set up SMSFs without being made fully aware of the time and costs involved in running their own superannuation fund.

“It is critical that those recommending a SMSF provide effective disclosure to their clients,” he said. “We need to ensure that people are familiar with details such as the financial and time burdens and the amount of money they need in the fund to make it a worthwhile option,” he said.