The SMSF Association has said it believes the current policy needs to be tweaked, not overhauled, to stop the issue of elder financial abuse.
In a statement this morning, SMSFA head of policy Jordan George said there are current dangers emerging from the ageing population and cognitive decline that may make elderly superannuation fund members more vulnerable to financial risk.
“But it’s important to acknowledge that SMSFs are, in the vast majority of cases, an effective and efficient retirement savings vehicle for Australians – even where an SMSF member may have lost capacity to be a trustee,” he said.
“We are not convinced that additional and stronger legislation will result in increased protections against elder financial abuse. Rather, we suggest that education for trustees and advisers on planning for the loss of capacity is the first step to reducing the risk of elder abuse occurring in the SMSF sector.”
Mr George added that while the SMSFA does not believe in prescribing arrangements for loss of capacity, it does believe this issue should be more carefully considered and planned for by trustees and their advisers.
“Accordingly, the association proposes that the SIS Regulation 4.09 is amended to include that the trustees of the fund should formulate and review regularly the consideration and planning of the loss of capacity and SMSF exit strategy as part of their investment strategy,” he said.
“Our proposed amendment is similar to the recent addition to the SIS regulation 4.09 (2)(e) that requires trustees to consider whether they hold insurance. This has had great success in putting insurance to the front of every trustee’s mind and will have the same effect with estate and succession planning.
“Furthermore, it then becomes a legal requirement that trustees consider estate planning and this becomes part of the audit standards that SMSF auditors must see evidence of when auditing funds each year.”
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