SMSF financial advisers need to be mindful of the implications foreign pension fund transfers can have for their clients’ total super balances (TSB) as well as their advice value propositions for this service, a sector technical expert has said.
At the recent Super Reforms Masterclass in Melbourne, Miller Super Solutions founder Tim Miller told attendees the ability for an SMSF to receive foreign transfers had been made easier due to the abolition of the fund-capped contribution rules, although these transfers had TSB implications.
“Before we could restrict how much somebody could put in to an SMSF based on the value of that contribution,” Miller explained.
“Now we’re saying there is no restriction and it’s based on your total superannuation balance so trustees in the SMSF space, who are also the members, are making that assessment as to whether or not they can accept the contribution.
“So what it does mean is that we can have rollovers from overseas that will be treated as a contribution that can be accepted into the fund.”
However Miller said trustees and their advisers needed to be aware these transfers would now be counted as non-concessional contributions and part of an individual’s TSB meaning they could not be accepted into the SMSF if a member’s asset balance exceeded $1.6 million.
Further, he pointed out how important it could be for advisers to add the treatment of foreign pension fund transfers to their advice proposition.
“A lot of us don’t undertake foreign transfers but all you need is one client to walk in and say ‘can I do this’ and you’re going to need to know these rules,” he warned.
“There are experts who deal with this stuff but they also do administration and accounting.
“The moment you push your funds to these other people for that there is a good chance you won’t see those funds again.
“So you need to understand there are opportunities with these foreign transfers.”
