As you are most likely aware, all superannuation rollovers are now conducted using the SuperStream rollover standards. This came into effect on the 1st of October, 2021.
This has resulted in the tracking of all superannuation funds by the ATO. As a result, it’s much easier for superannuation participants to view their super funds in one central location.
How this has benefited SMSFs
One of the major benefits of this centralised system comes from the use of the new Single Touch Payroll (STP) that all employers are now required to use via their accounting software.
This has been a positive for SMSF members as funds are transferred on a faster and more regular basis. Apparently, this has led to an additional inflow of funds into individual SMSFs.
It’s also apparent that superannuation rollovers into SMSFs have happened quite quickly with most only taking around 4 to 6 weeks.
However, as is the case with most new systems, there are still some improvements that need to be made to create greater efficiencies in the entire process. One of these is the automation of ID verification in order to remove the laborious manual processes.
SMSFs could struggle with the required timeframes
Due to the conditions and processes required, it will be difficult for SMSF trustees to move any member’s funds in the three-day timeframe that is required. Such difficulties arise due to the complexities of cash requirements, online banking limits, processing times, documentation, and valuations.
For these reasons, it is necessary for SMSF accounting firms to educate their clients as to the processes required. According to the current rules, any rollover requests can be initiated by either side. However, to make this process more seamless, it might be better if only the receiving superannuation fund initiates the rollover request.
There has also been an uplift in insurance issues since MyGov automated the transfer of rollover funds into SMSFs.
SuperStream is still a work in progress
When the implementation of rollovers through SuperStream was first introduced, the process was rushed and many participants were unaware of the necessary data that was required. This resulted in many rejected rollovers and the reasons for these were not easily understood.
However, as time progresses, cooperation between users and the Superstream system will ensure that improvements are made to initiate smoother transactions.
The main issues that need to be ironed out include:
- The inability, due to privacy reasons, for tax agents and other professionals acting on behalf of an SMSF, to evaluate error messages when validating member and fund information via the ATO.
- A lack of transparency with APRA funds often results in a delay in rolling funds over into an SMSF.
- Because banks act as the facilitator through Electronic Fund Transfer (EFT) this is causing problems when it comes to large sums that exceed their daily limits.
- The lack of financial advice that members and trustees seek before making major rollover decisions.
Hopefully, over time, these issues will be addressed and the entire rollover process will become more seamless and less fraught with problems.
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