Super fund censured for delayed SMSF rollover

A superannuation fund which took too long to transfer a member’s income stream account balance to his self-managed superannuation fund (SMSF) has been warned of its behaviour by the Superannuation Complaints Tribunal (SCT) and ordered to compensate him for lost investment earnings.

The SCT made clear in a determination issued late last year (D18-19\042) that superannuation funds needed to clearly communicate the processes involved in making transfers to SMSFs and not unduly delay. The SCT redacts the names of both the superannuation funds and the members who make the complaints.

The rollover request was made in July, 2016 but not completed till mid-October.

The problem arose when the superannuation fund member sought to rollover the balance of his income stream account with the fund to his SMSF in July, 2016, with the member being asked to supply proof of the Australian Business Number (ABN) of his SMSF and proof of his identity.

VIEW ALL

View all

However, the superannuation fund then claimed it could not match the information provided with the AUSkey system administered by the Australian Taxation Office (ATO) and so could not verify he was a member of the SMSF.

He was advised by a phone consultant on 4 August, 2016 to contact the ATO to adjust the system and then contact the superannuation fund so that the rollover could be treated as a priority, but the SCT noted that it was the regulatory responsibility of the superannuation fund itself to contact the ATO within five working days.

The SCT said it was of the opinion that it was unacceptable of superannuation fund not to ensure it had initiated contact with the ATO as per its business rules to ensure it could rollover the complainant’s benefit to the SMSF and then to take no action concerning the rollover after the 4 August, 2016 telephone call.

“Therefore, in all the circumstances, the Tribunal was satisfied that the Trustee could have processed the Complainant’s rollover by 9 August 2016, being three business days after the date that Trustee could reasonably have had ATO approval to process the Complainant’s rollover if it had followed SIS Regulation 6.33E and contacted the ATO to verify the Complainant’s information,” the determination said.

The superannuation fund was ordered to pay the member an amount equal to his income stream account balance calculated at 9 August, 2016, plus interest at six per cent for the period 16 August, 2016 to 19 October, 2016.