Advisers relying on their SMSF software to generate pension documentation for their clients in pension phase are running the risk of the paperwork being inadequate for these needs, according to a senior superannuation consulting executive.
“If you are issuing pension documentation which simply comes off your superannuation software, you press a button and instantly you’ve got pension documentation, I would say to you, ‘isn’t it amazing that that software system was able to read the trust deed of your particular superannuation fund and put all the necessary clauses in there’,” McPherson Super Consulting director Lyn Formica told delegates at the Chartered Accountants Australia New Zealand 2016 National SMSF Conference in Melbourne last week.
While it was a situation many practitioners thought was laughable, Formica pointed out a lot of advisers were happy to use this functionality without further consideration if it’s included in their superannuation software package.
“Pension documentation should be unique to the particular superannuation fund you are dealing with and unique to that particular fund’s trust deed,” she noted.
Fomica emphasised all SMSF service providers needed to read the trust deed to know how it applied to their situation and needed to also avoid believing a thorough knowledge of a particular fund’s deed was only the domain of auditors and lawyers.
“Even as administrators we need to read the deed,” she said.
“If you’re dealing with pensions you’ve got to know what’s in you trust deed so that you can tailor that pension documentation accordingly.”
Formica cited insufficient or inadequate pension documentation as one of the main sources of angst for SMSF trustees in the retirement phase.
“Ideally, pension commencement documentation will have a request from the member to commence that pension. You’ll then have the trustee resolutions and all of those things,” she said.
“You’ll have a little pension schedule ideally which will indicate what type of pension we’re dealing with, what the proportions were, whether or not we’ve nominated reversionary beneficiary and those sorts of things.”
