SMSF Association chief executive John Maroney has cautioned SMSF trustees not to ignore the need for robust retirement planning despite the sector being exempted from Retirement Income Covenant (RIC) requirements in draft legisaltion released this week.
The association lobbied the government to remove SMSFs from the RIC, which requires trustees to develop a retirement income strategy for fund members, on the basis that trustees and members are generally the same in SMSFs and adding them to the reforms would only add cost and red tape, thus inhibiting the sector.
Subsequent to the exemption being announced, Maroney reminded SMSF holders that the need to prepare for retirement hasn’t simply gone away.
“Just because the law doesn’t require you to have a retirement income strategy, doesn’t mean you shouldn’t have one,” the CEO stated.
“It’s not a green light for SMSF trustees to ignore the spirit of the [RIC], as we know from bitter experience that failure to properly addres these issues can derail even the best laid retirement plans.”
SMSF trustees are still responsible for ensuring members devise a strategy to maximise retirement income, as well as minimising risk and providing drawdown flexibility, Maroney said.
“However, codifying it in the law that SMSF trustees, who are usually also the members, must do so would impose an additional compliance burden on SMSF trustees and SMSF auditors when there is a strong incentive for SMSF trustees to look after their own best interests,” Maroney said.