SMSFs pose retirement risks

SMSFs/self-managed-superannuation-funds/cooper-review/government/chief-executive/director/

3 August 2010
| By Mike Taylor |
image
image
expand image

 

 

 

The operational risks associated with self-managed superannuation funds (SMSFs) as retirees age and are no longer capable of managing the funds have not been adequately addressed, according to new research released by Financial Services Institute of Australia (FINSIA).

The research, which took the form of a health check of Australians’ financial wellbeing in retirement, warned that while plenty of attention had been directed at retirement incomes as a result of the Ripoll Inquiry and the Cooper Review, the average Australian remained largely apathetic with regard to their superannuation arrangements.

Commenting on the research, FINSIA chief executive Martin Fahy said the disconnect between Australians and their retirement needs could be attributed to complexity and information overload.

“While the Cooper super system review provides significant opportunity to make positive changes, the Government must be conscious not to cause greater confusion and complexity in the reform process,” Fahy said. “Paradoxically, just as poor decision-making in relation to retirement can often be due to a lack of available information, there is also a risk of further disengagement by offering too much choice.

Dealing with the question of SMSFs, Australian Centre for Financial Studies director Professor Deborah Ralston said that in developing policies to deal with financial wellbeing in retirement it was critical that longevity, investment and operational risks were identified and addressed.

In doing so, she cited SMSFs and said they faced considerable challenges in the retirement versus accumulation phase.

“Current policies have not adequately been directed towards the operational risks associated with SMSFs as retirees age and are no longer capable of managing their own superannuation funds,” Ralston said.

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

Entireti has unveiled the new name for the AMP financial advice businesses that it acquired last year....

4 weeks 1 day ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 6 days ago

TOP PERFORMING FUNDS