The state of record-keeping and trust deeds for pensions was not up to scratch and more care was needed to be better organised for any future changes to the account, according to a specialist SMSF lawyer.
“I review documents all the time from all different sources and guess what – I’m pretty appalled at the quality of the documents that I see for pensions,” DBA Lawyers director Dan Butler told the DBA Network SMSF Strategy Seminar in Sydney last Wednesday.
“It’s really lowball – I don’t often see product disclosure statements; I often see the resolution is to set up an account-based pension from such date and the account balance is $500,000, for example, and that’s standard.
“In most cases, the trust deed is very lacking [because] it’s from one of those deed suppliers that are into the money and not looking after their clients’ interests, so sure, their deeds are cheap, but if you wanted a change of trustee, you’ll have to buy their deed upgrade, then you can do a corporate trust deed for an individual, and then if you want to do a pension, you’ll have to buy their pension kit for an extra $300.”
Many trustees did not realise those two simple transactions could end up being more expensive than the best-quality deed in the country, Butler said.
“One of the cheapest deed suppliers in the country has that system,” he said.
“But people don’t review or read these things.
“The documents out there are lacking and I’m often struggling to even understand what kind of pension we’re dealing with, so it’s my biggest gripe to know what I’m dealing with.”
