ICAA supports Sinodinos' SMSF review

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The Institute of Chartered Accountants Australia has supported a review of borrowing in self-managed superannuation funds.

The support follows comments made by Assistant Treasurer, Senator Arthur Sinodinos.  

Sinodinos told The Australian Financial Review that he wanted to make sure SMSFs did not have an advantage over industry and retail super funds.

“What I noticed [is] that since the global financial crisis there has been an upsurge in interest through investing in self-managed super funds,” he said, in the AFR.

“On one level that is quite understandable, but on another we have to make sure that no matter what the vehicle is, it’s done in such a way that the ultimate objective is to preserve and maximise the savings for retirement.”

ICAA head of superannuation Liz Westover said that while borrowing can be a useful way of increasing your retirement savings, trustees need to ensure that it is used appropriately for quality investments.

Westover said greater focus needed to be given to the quality of advice available to consumers in relation to setting up and operating an SMSF and in particular in relation to borrowing.

“Australians should seek professional advice when they are considering an SMSF - borrowing should be the last thing people consider when deciding whether to set one up or not.

“Instead, greater focus needs to be around improving the availability of quality and objective information and advice around whether an SMSF is the right retirement vehicle for individual circumstances.”

In the RBA’s Financial Stability Review, it said, “Although this sector does not currently pose material risks to financial stability, it is important for the financial position of the household sector, and has a number of aspects that warrant careful observation in the period ahead.”