Investors tend to be highly enthusiastic about establishing self-managed super funds but much less enthusiastic about closing them down. This view is strongly supported by the statistics.
ATO figures show that in the seven years to June 30, 2010, more than 209,000 SMSFs were established yet only 31,000 were wound-up.
The percentage of funds being closed is really miniscule considering that just 1071 funds were wound-up in the 12 months to June – and there are 432,675 funds in existence, according to APRA’s latest quarterly superannuation report.
Smart Investing likes to keep a watch on fund closures because the possibility of closing a fund – perhaps after the most active member dies or when a fund is no longer financially feasible – is a crucial consideration for trustees. Read Smart Investing on June 30 regarding this issue.
Of course, steps can be taken – perhaps with the guidance of a financial planner – to try to resuscitate an underperforming SMSF. But understandably, closure may be the best course in some circumstances.
Interestingly, the ATO this month released an updated version of its publication Winding-up a self-managed super fund. It makes valuable reading for trustees who are considering closing their funds.
Even if your fund is using a professional adviser or specialist SMSF administration firm to manage its closure, this straightforward publication should provide trustees with a useful overview of things they should be thinking about.
In short, trustees have to correctly deal with member benefits and to ensure that the fund is closed in accordance with superannuation law.
* Written by Robin Bowerman, Head of Retail at Vanguard Investments Australia.
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1 comment:
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