SMSF trustees using SuperStream for fund rollovers still need regular education about the process as many will be unfamiliar with it despite the system being in operation for nearly two years, an SMSF administration provider has cautioned.
Heffron client relationship manager Sean Johnston said despite SuperStream being in operation since 1 October 2021, walking clients through the steps of making a rollover out of an SMSF was still required to prevent mistakes being made.
“If there is one takeaway from everything we’ve learned since the implementation of SuperStream rollovers, it’s that education really is the key here. The more work you can do upfront, the more likelihood you have of nipping a problem in the bud,” Johnston said in an update on the Heffron website.
“Remember for many clients completing a rollover is something they will do a few times across the course of their life. Even those clients who have done rollovers in the past, have done them in a different landscape to the one we have now and the process will be unfamiliar to them.”
He said this need for education was evident when a member requests a rollover out of an SMSF, and while SMSF practitioners were aware this request must be actioned by the trustee within three days, trustees probably were not as it is a ‘new’ rule.
“Make your clients aware that this timeframe exists, start communicating with them early in the process and start educating them to change their language when requesting rollovers,” he said.
“Our preferred approach here is to get members to request that the fund is prepared for rollover before they formally request the rollover,” he added, noting this preparation may include selling assets, bringing the accounting up to date, interim tax calculations and changing bank transfer limits.
Actioning a rollover after receiving a request was where Heffron was seeing the most problems as the process was new and complex, he said.
He suggested practitioners provide clients with a checklist that reminds trustees the rollover payment amount exactly matches the rollover amount on the SuperStream notice and is made to the bank account on that notice using the payment reference number on the notice as the reference number for the transaction.
Any errors in these details may not lead to the failure of the rollover, according to Johnston, but would require manual intervention and there was no industry-wide approach to fixing incomplete rollovers.
“The only sure-fire way to know how to fix an erroneous rollover is to call the recipient fund and ask them what they require,” he said.