Strategy, Superannuation

Trustees to determine access to benefits

trustees benefit payments

Trustees should be more involved in their benefit payments strategies and not just rely on advisers to determine the required actions

SMSF trustees should take a more proactive role and take on more responsibility when putting in place a benefit payments strategy and should not simply depend on financial advisers for this decision-making process, according to a technical expert.

“You need to understand what is required when paying benefits out of a fund. It’s not only [a matter of saying] ‘okay, well I’ll get onto an accountant and they will sort it out for me’,” SuperConcepts technical and private wealth executive manager Graeme Colley said during a webinar hosted by AMP Capital today.

“[You must] think about the way in which you’re going to draw down that pension because that is your decision, not your accountant’s decision. You might want to draw it out once a year or fortnightly or monthly.”

In accordance with a strong benefit payments strategy, Colley suggested trustees consider numerous questions specific to their own circumstances in order to develop a smooth retirement plan and even prepare for unforeseen circumstances.

“How are you going to draw down money? Are you going to draw it out as lump sums, pensions or a combination?” he said.

“If one member dies in that superannuation fund, how are you going to pay benefits out of that fund? Is [the fund] going to have a binding death benefit nomination?”

Additionally, he noted SMSF trustees needed to take into account their current predicament when formulating a strategy to access their benefits and the implications for other critical components of the fund.

“[If you’re] moving from accumulation phase into pension phase, as you might be when you’re drawing down benefits, if you’re going to draw cash out of that fund, how are you going to do it?” he said.

“That fits back in with the investment strategy.”

Copyright © SMS Magazine 2024

ABN 43 564 725 109

Benchmark Media

Site design Red Cloud Digital